Money IQ

Protect Yourself from the Dangers of Inflation

This past Thanksgiving, my wife prepared her 20 year old recipe for Jell-O® cranberry salad. After 20 years of preparing the same desert, she was surprised when it turned out soft and slushy. After doing a little research, I discovered that Jell-O® brand is packaging less gelatin in each package.

Did you realize that many companies are shrinking the size of their products and keeping the price the same? This is secret inflation. Here are a few examples:

• Charcoal bags have gone from 18 lbs. to 16 lbs.

• Margarine tubs have gone from 48 oz. to 41 oz.

• ½ pound of shredded cheese (8 oz.) has been

   reduced to 7 oz.

• Yogurt singles have gone from 8 oz. to 6 oz.

• Sugar has gone from 5 lb. bags to 4 lb. bags

• Cereal, crackers, potato chips, and more have all

   gone to reduced ounces

When an eight ounce item is reduced by one ounce and the price stays the same, the reduction results in 12% inflation. Over the last two years, America has already experienced a 10-15% unannounced annual inflation rate.

I have warned people of the implications of inflation ever since I started teaching and counseling about finances. Why? Because inflation is a secret destroyer that robs so many families of their hard-earned cash. In order to battle against it, inflation needs to be constantly exposed, wooed into the open and disclosed. It must be stripped of secret methods and damaging antics and finally brought under the control of common sense and biblical wisdom.

In recent days the subject of inflation has been splashed across the worldwide news media as one of the most dangerous issues to be faced in this 21st century. Inflation is generally defined as the increase in the cost of goods and services over time. If this week you bought $100 worth of food at the grocery store and a year later you bought the same food items for $105, you would have experienced 5% inflation.

Most civilized countries anticipate an annual increase over time of two to three percent inflation. There are many complex factors that can influence the inflation rate. The most dramatic and dangerous one is the printing of large amounts of money by a country with no asset value to back up the money. This is exactly where America stands today. Why is inflation so bad? Because it reduces your buying power with the money you bring home each month, as well as money you have in savings, and all of your retirement planning.

We could be headed toward a time of high inflation, but do not fear – God’s promises in His word are still true. Remember the sons of Issachar in 1 Chronicles 12:32? They were “… men who understood the times, with knowledge of what Israel should do…”

As you become aware of what inflation is all about, there are a number of things you can do to keep inflation from robbing you of your hard-earned money. First, believe the promises of God. If we continue to give and be generous, we will receive His blessing (Luke 6:38). God teaches us to profit (Isa. 48:17). God multiplies our seed, meaning money, so that we can do more in righteousness (2 Cor. 9:10). God instructs us to sow bountifully, with His promise that we will reap bountifully (2 Cor. 9:6,7). And Jesus said be anxious for nothing, seek first the kingdom and all these things (referring to what we eat, drink and wear) will be added to you (Matt. 6:33). These are God’s promises and they are not subject to economic conditions. They are true for all time, in every circumstance, and for all of His children.

We can count on God’s promises, even in the face of inflation. There are some practical things we can do to protect ourselves. Proverbs instructs us to use our common sense (Prov. 14:33), to look ahead for dangers and prepare to meet them (Prov. 22:3 and 27:12), and to be cautious and not rush into the unknown (Prov. 14:2 and 16).

1. Use coupons. There are many places where you can get discounts and coupons on the Internet for nearly any grocery store. Some stores will accept competitor’s coupons, while others give double discounts on certain days. You can dramatically offset inflation using coupons. Here are a few web sites to get printable coupons; many of them are updated daily.

            www.redplum.com

            www.coupons.com

            www.couponmom.com

            www.coolsavings.com

            www.wow-coupons.com

            www.shopathome.com

And don’t forget, there’s always the Sunday paper.

2. Bring a calculator, paper and pen shopping. Be aware of the shrinking size of containers and try to buy those that still give full measure in the container or package. Start writing down the amount and what you pay so that you can compare. Learning to cook from staples like wheat, flour, beans, etc. is also helpful because you can buy in bulk.

3. Consider stocking up on emergency food and water. Canned goods that you purchase today are worth more than what you might buy next month. The dates for use are printed on the cans and most have a shelf life of one to two years.

4. Keep a supply of cash in a fireproof place. For Christmas this last year I bought each of my adult children a fireproof document box with a lock and key. Learning to take care of important documents is an essential task for every believer.

5. Invest. If you are able, buy some gold and silver. In troubled times they will hold their value and even increase. In the last few years gold has almost doubled in value.

6. Keep your money working for you. Investing in conservative mutual funds or bonds is necessary to keep up with inflation. The cash in the bank or money market account is going to return only one to two percent, and you will not keep ahead of inflation. At least some of your money needs to be returning a minimum of five to seven percent or more. Talk to a trusted financial advisor for guidance.

We do live in challenging times. We need to be aware and prepare, but we do not need to be afraid.

Attorney Randy Swanson is the host of the TV program Money IQ, which can be seen at TLN.com.

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