Inflation is running rampant. Gas prices are off the charts, rent has gone up, interest rates are rising. The key here is your income is likely not matching the pace. Maybe you got a 5% raise last time (if you are lucky). Inflation at 8%+ you’re losing money in nearly every area. Look this post doesn’t have to be long today, I’m not going to fill it up with elaboration on inflation.
There is likely one area in your life where you are underestimating how much you spend. That area is food. Yes, those $4-dollar coffee’s you buy twice a day, that organic ketchup on and on. Food prices rarely go down and the creep on food prices happens gradually. Here’s the rub, that food that you purchase, unless you buy a lot locally, has to be processed, shipped and stocked. All of that goes into the price point. So gas is going up? All of the food you’re buying at the super market was trucked in, someone had to pay for gas to get those products there.
Here is a link to a world food price index Now this is something finance professionals use to gauge real inflation numbers. I’m not suggesting you delve deeply into this. What this site does is aggregates average prices around the world for common food categories (meat, milk, sugar) and comes up with a “global average”. In 2004 the FPI (food price index) was 65.6 today it is 158.5.
A remarkable increase right? The key here is this never goes back below the prior year’s index. Unlike gas, housing and interest rates food prices keep going up. This is why your food cost is one of the most important budget numbers you have to know because the “price creep” is real. You are always going to be paying more for food, and now with inflation you are paying more for everything so chances are you are starting to lose wealth AKA purchasing ability.
Tighten up your food purchases, make your coffee at home, pack a lunch instead of eating out. Food continues to go up because we all need it; you die without out. Are you over spending here? Are you aware of exactly how much you spend a month on food? I look at how much I spent and I was blown away. I started a victory garden and that helped. Sure I don’t buy tomatoes anymore but coffee? Meh…
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