Inflation, inflation, inflation. It seems that’s all we’re talking about these days, and this pesky little word appears in almost every conversation. Well, it’s only natural to transition the public debate from something that affected our health (COVID) to the aftermath that was always going to affect our wallets. And when inflation is hitting double digits, it’s high time to spread some knowledge on how to deal with this unfortunate turn of events, what we can do to salvage our money’s worth, and how a storage unit can be a game-changer in this regard. But before we get to that, let’s all get on the same page regarding what inflation is, where it comes from, what is affecting it, and how we can counter its effect.
What is Inflation
If you open any economics book, you will find out that inflation is described as a devaluation of money, which is a fancy way of saying that your money is losing its value. Now that might sound bad, but it’s quite normal for any economy to experience inflation. Usually, an annual money devaluation of under 4% is considered a good sign. It means that there is economic growth and the population is becoming wealthier. On the other hand, if there is deflation (meaning your money actually gains value), it means that the country’s economy is beginning to stagnate, which is the first sign of recession. It’s a bit counterintuitive, and to be honest, there is a lot more to it, but that’s the gist of how inflation works.
Why is inflation soaring at the moment?
As you might have noticed, currently, the prices are galloping faster than a cheetah on steroids, as it recently hit a 40-year high. The Bank of England expects the cost of living to increase to 13% by the end of the year, which is more than three times higher than the acceptable inflation levels. Two significant global events and six major factors contribute to the rise of prices not just in the UK but across the entire world.
COVID, of course, took its toll on society. After prices plummeted because of low consumption during the worldwide lockdown after the pandemic ended, they naturally bounced back. Most notably, this happened with energy prices, since all major economies raced to get natural gas and petrol to fuel their economies literally.
Moreover, the pandemic disrupted international deliveries, which made many manufacturers delay orders. This hit the car, bicycle, textile, furniture and other industries hard and many orders had to be delayed significantly. So naturally, that drove the second-hand market up, and now used items are being sold at a highly inflated price.
The energy prices also drove all manufacturing prices up, as furniture, household goods, and even restaurants and hotels had to raise their prices due to expensive electricity.
The war in Ukraine didn’t help either. Energy prices soared even higher due to sanctions against Russia, the biggest exporter of natural gas and the second biggest exporter of petrol. Moreover, the aggression led to disruption in grain production from the two biggest exporters in the world – Ukraine and Russia, and naturally, food prices skyrocketed.
Finally, there is the consumer’s behaviour. Usually, when prices are rising rapidly, people tend to limit their spending. However, due to the lockdowns, people are actually now more economically active than ever. This drives prices even higher, and although it’s good for the business since more consumption means more production, it’s not very good for balancing the runaway inflation rates.
How to save your money from devaluation
Several tactics will help you save your money from inflation. The only thing you should definitely avoid is keeping all your eggs in one basket.
Don’t keep all your money in a bank.
That might sound a bit counterintuitive, but you shouldn’t keep all your savings in one bank. With the rising interests, that might look like a lucrative deal, but interest rates rarely will outweigh the increased cost of living. Naturally, that doesn’t mean keeping your money in a chest buried 23 steps away from the cherry tree next to the fence is a good idea. The best course of action is to have a part of your assets in the bank, a part of them in cash and the rest – invested in stocks, products or precious metals.
Have several currencies
This is a good idea in general, not just during high inflation. However, in this case, you need to know what currency is stable at the moment, as high energy prices are shaking the entire globe, not just the UK. Still, some currencies are safer than others. For example, the Euro is far less trustworthy nowadays than the Swiss Franc and, shockingly, the US Dollar.
Invest in stocks and precious metals
Once again, that’s excellent advice, not just during high inflation but in general. Remember that if you buy stocks or precious metals, you can’t sell them right away, as their value will mature over time. If you make such an investment, be sure you won’t need the money for a minimum of five years. Naturally, the market might boom, and the value of the stocks (or precious metals) may double in a week, but that’s more of a wishful thinking than something that could actually happen.
To save your money from devaluation, you need to spend it wisely and with caution.
A storage unit might save your money
The best way to save your money from inflation is to use it and buy something that adds value to your life. We all save money with something in our minds. However, whenever there is high inflation, it’s the best time to buy that thing you always wanted, but you don’t have the place to store it. Or there never was the right time to buy it. Well, now it’s the right time. Keep in mind that these purchases are only investments if they add value to one’s life, and they can become a rarity. For example, a new bike is not mandatory if you are an avid cyclist. Still, with the current disruption in deliveries, in addition to the added benefit of the virus-free and healthy transport method it represents, a new bike is actually a good investment. One that won’t lose its value drastically after it leaves the store.
Naturally, you need to have the physical space to keep all these items and since not all of us live in Buckingham palace, getting a storage space is the only option.
Any storage solution is primarily used to make space in a home, office, or other significant areas. Mobile storage units like Pink Storage are used by businesses as an affordable, space-efficient alternative to warehouses. It is a quick and straightforward method of long-term or temporary inventory storage. Having a location to put spare belongings might be helpful for homeowners or people dealing with disasters. It is less expensive than constructing a garage, building an addition to a house, or finishing any other home remodelling tasks.
Hiring a storage space for such a purpose is not an expense but an investment in protecting your money from inflation. It’s always better to have a portion of your savings in products that can be sold at a moment’s notice. This is especially true when it comes to equipment which is susceptible to shortages when delivery systems are disrupted (such as sports equipment, electronics, furniture and others). Naturally, you need to have trusted and secured storage, where these items will be safe from the weather and theft, so you will be sure nothing will happen to the things you’re storing.
Let’s recap
It’s said, but it’s true. The current inflation has reached a 40-years high, and it seems that the price will continue to grow. The worst thing is that the high inflation is due to international events beyond our control, so all we can do is try to salvage our money the best we can. The most important thing we must remember is not to put all our eggs in one basket. We need to have some money in the bank, get some stocks and precious metals, buy some foreign currency and buy some items that have high added value to our lives to use them and store them for better days.