How Inflation Hurts You and Your Family

Inflation

When you heard somebody in authority like an economist, or a government economic guru, or a central bank official that would say - "... we are targeting an inflation rate of 3 to 4% this year.", what do you have in mind?

More often than not, majority would agree that it is for the economic health of the country - to boost the economy in order to generate more jobs, in order to make business environment conducive for entrepreneurs and investors, and so on... Sure! But wait - has there anyone thinking of trying to look at the other side of the coin?

Looking on the other side at any case gives us the whole picture of the situation. Inflation has usually been portrayed as an essential ingredient of the government's economic agenda across the board. It is rarely presented as to what it does to the individuals -  the working public, consumers and even to the families that concerns to you and me.

Here are the TWO SUBTLE effects of Inflation that affects us as an Individual.

I - It Bites Behind Our Back (Financially)

When our government says they are targeting a certain percentage on inflation say, 3% this year, what they are trying to say is that they are allowing the system to rob 3% from our current income, from our existing savings if any, and even on our freedom.

It eats us behind our backs financially because Inflation erodes the value of what we have and to the value of what we are expecting to receive pay-day to pay-day.

Based on the current economic data on Inflation from 1998 to 2016 released by the Philippine Statistics Authority (PSA[See attached Photo]) - our 100.00-Peso bill at the onset of 1998, fast forward today - it has lost an enormous amount of its purchasing power to the tune of Php 86.00. In other words, our 100 Pesos in 1998 technically worth only 14 Pesos today.

Simply put, for example a public school teacher of SG-11 is receiving Php 19,000.00 plus gross basic salary every month. That 19 thousand plus salary might erode 4.5% of its purchasing power (the most) for the next succeeding years based on the average of the inflation rates released by PSA. In five years time, that teacher looses Php 4,000 of the perceived value of his or her salary. On the side note, even the concurrent 4 tranches of salary increase cannot even compensate the eroded purchasing power of the teachers' salaries for example.

In turn, it may push you and me to give up percentage of our freedom - The FREEDOM to spend quality time for our family, recreation and leisure, and other worthwhile and beneficial activities other than working for a living. It compels you and me to do more on overtime, eying for sidelines or other resorts just to cope up and maintain the kind of lifestyle we used to have.

II - The Bites Are Barely Unnoticeable

Subtly, we cannot feel the immediate effects of inflation in our pockets. The thing is, overtime, we will just feel the burden and its sensations: Uneasy, worrisome and anxious to cope up with the unprecedented financial burdens being felt.

It is like Termites' attack that if ignored, allowed or unnoticed - sooner or later, we have to take actions against it. Otherwise, it will be tantamount to loosing the major need we have established and provided for our families - our shelter.

THE REALITY

Termites can be prevented. It can be treated and even can be exterminated. However, Inflation cannot! Every government simply cannot allow to have a zero inflation in the system. So much of its negative effects on us, there are also perceived positive effects of inflation that a whole country needs. She needs to have a doze of it in order to cope up with the demands of economic growth, resiliency and sustainability of the whole nation.

Perhaps, this leaves us with no choice but to beat inflation in our own economic backyard. If we wanted to preserve or even improve our family's financial health, quality time, and freedom, we must take actions and establish our finances in a ground where we can set a solid foundation.

It is worth to invest in Financial Education primarily as the first step to achieving, preserving and defending your FREEDOM.

For your Freedom!

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