Historic Inflation – The most important # you need to know is 3.22%

So another finance piece today. I am not going to go through my normal disclaimer hopefully by now you understand you should be diligent about your finances and obtain information from multiple sources. I’m thankful you consider me one, today we are going to talk about inflation. Yes, its real, and it isn’t exclusive to one region we have global inflation. The numbers I will use in this post will be U.S. numbers but in my research it tracks, mostly, globally.

You are probably wondering what the 3.22% is, that is the historic average inflation rate over the last 108 years. That’s ON AVERAGE, which is important. We have years in there where we have 13.5% inflation (1980) so it’s really important to have good perspective here. Historic inflation isn’t as important as “life time” inflation. That metric is the inflation rate in YOUR life time. For me? Its 3.95%. None of the numbers I am throwing at you include 2022 which right now is approx. 8.5% (give or take). As it isn’t a full year of data we can’t use it for these purposes.

Here is a link to the historic chart I am using. So a few important things to remember.

  1. The distinction between historic and life time inflation rates.
  2. The likelihood of sustained inflation.
  3. Globalization

I distinguished the 1st item already, but items 2-3 are intertwined. We had a sustained period of high inflation in the U.S. from 1973 – 1983 (roughly) that’s a long time. That was in my life time, it might be yours too. What normally happens, and is happening now is wages increase as inflation increases but rarely at the same rate. As an example, it’s likely that in 2022 we will come in between 6-10% inflation for the year, it’s unlikely that your income increased by that same amount. The thing that is a killer about sustained inflation is multiple years where your income doesn’t match or exceed inflation = less wealth overall.

Inflation decreases your purchasing power.

You may make more but it doesn’t buy as much, basically. Globalization is a fairly new phenomenon in the inflation equation. In the 70-80’s it was far less then it is now. So what happens in one major country affects the global consumption and production metrics. If China can’t produce as much of X as it normally does, the price of X goes up, or inflates. Add in a pandemic here and there and well you get the picture.

There is only one sure fire way to combat inflation for you personally and that is increase your income by more than the current inflation rate. The problem is most can’t do that. So the second best way to combat inflation is to ensure your income and investments are increasing more than the average inflation rate in your life time. So for me, that means I need to increase my income and investments every year by 3.95%. Now that is just to remain as is, if I want to improve my financial situation (my ability to consume more) I need to increase my return by MORE THAN 3.95%.

Take a look at the link above and see what your life time inflation rate is. This is the minimum target you should be striving for in all of your investments and your income. Trying to figure it out monthly or on an annual is probably not going to work, but hey if you can make 8.5% in these markets I tip my hat to you. For now, shoot for 4% minimum, 6-8% would be ideal and reasonably attainable if you have investments.

Thanks for coming by and supporting my blog I really appreciate it. Want to see another post like this one? Click here.

3 compensations factors that make companies great.

The great resignation marches on and in the U.S. unemployment is near record lows. Millions of people left the workforce due to the pandemic. Whether it was creating their own income streams or boomers retiring, there are a shortage of workers in the U.S. Now let’s be very clear here, the available jobs are not high end 6 figure salary roles. Sure there are some of those but nearly everyone has leveled up, so your traditional entry level positions are the ones that have the most openings presently.

Regardless of when you get a new job or if you are evaluating your current company there is one truism you always have to remember. Companies need you to perform tasks so they can make money. You wouldn’t be employed if you weren’t either generating income for the corporation, or supporting others who did. So in this sellers’ market (you the employee are the seller) we can now be even more selective of the places we want to work. There are 3 compensation factors that make companies great. This may not be in line with other lists you see out there but from an employee’s stand point, here they are.

Surviving 2020 & covid
Great, another list…..
  1. A robust retirement plan: This includes employer match, Roth and Traditional 401K/403B options. This should be managed through a large firm like a fidelity and the vesting time line is no longer than 3 years. Retirement planning is critical and most successful retirees in the modern era have created wealth through automatic withdrawals via their employer’s plan.
  • Comprehensive benefits: Health Insurance is obvious but you should have 3+ plans to choose from. Dental, LTD, STD, a 1-year life insurance of your salary. There should be A good PTO (Paid time off plan) that scales based on tenure. Every 5 years you should receive 1 additional week of PTO capping at 6 to 8. PTO should be one lump sum, vacation and sick and you get to manage it. Along with major federal holidays. This is where you really get value as this is part of your compensation package. It’s not just the annual salary, it’s the sum of the value of these “perks” as well.
  • Profit sharing: This is one of the rarest benefits you’re going to see out there. If you get into a company with this benefit you really lucked out. Most corporations keep their profits to make distributions to their shareholders. There is nothing wrong with that, they are paying you a salary and offering you benefits. It’s a fair exchange and one that has been the norm for decades. Profit sharing can come in all sorts of forms. Ideally what you get is if the company has a surplus to budget at the end of the year that amount is distributed to employees. Some managers are offered “profit sharing” of some form. I got quarterly performance bonuses based on budget performance in one role.

The 3 items listed above are in addition to your base salary. This is a sellers’ market and employees are now in a situation where they are empowered to create very good deals for themselves. THIS WILL NOT LAST FOREVER. Look, work isn’t meant to be easy. It’s likely you fall into one of two categories. You are either someone who truly loves what they do, or you work to obtain income so you can do the things you truly love.

Most of us fall into the latter category. Work is a means to get income to live life. The more perks you can get the better life becomes. Now is the time to look around, see what’s out there, measure your current work situation. Believe me if the situation was reversed and there was a surplus of workers your company would be looking to see if they could pay you less.

Thanks for coming by and supporting my blog I really appreciate it. Want to see another post like this one? Click here.

Great Resignation? One thing you should never do

So the resignation is ongoing or we are near the end I’m not sure. Another odd circumstance derived from the overzealous application of shutdowns. “This store can stay open but that one can’t” …. Don’t worry I’m not going to go off on a tangent here. So here we are, people are leaving the workforce, and some are not coming back. Of course there are more factors then just the pandemic that have led to this. Boomers are retiring, Side hustles are viable, people have downgraded their living standards.

Maybe you resigned from a role or are thinking about it? It’s not a bad option, inflation is high, employers need staff = the chance to make more money. I am pretty comfortable where I am now but if this were a few years ago I would have parlayed this into a new job for sure. However, there is one issue that comes up from time to time when you do resign that you need to be aware of.

Your current employer counter offers.

This happens, I’ve received them and on behalf of a company I have offered them to people leaving. Companies do this for a few reasons, but mainly it’s because they don’t have someone who can do what you do. So this begs the question, if they are counter offering does that mean you were undervalued? The answer is yes. Don’t be fooled here, just like you want to make as much money as you can working for a company, they want to pay you the least amount possible.

Plastic destroys the environment
Some companies are absolute garbage

I think that’s pretty obvious, sure HR dept.’s spends their resources trying to cultivate a “community” to provide non-monetary benefits but have no illusions here the single biggest measure you have for a company is how much it costs them to employ you. So a counter offer is flattering, in many cases it might even be financially lucrative. The issue is, the counter offer doesn’t change the reasons you wanted to leave. If the reason was financial, the counter offer confirms your rational.

There isn’t a positive outcome here for you except you make more money. If you had another job you were going to likely make more money, there anyway or have the potential too. Maybe this current job is comfortable for you, maybe you don’t really want to leave, maybe there are a 100 other reasons to stay. You got a counter offer because you told them you wanted to leave. Do you think they are going to look at you the same going forward?

Everything changes if you take the counter offer. Management knows you were willing to leave which is huge. Sure in the short term maybe they will kiss your ass because they need you (hence the counter offer) but you can bet they are already planning a contingency to replace you, I know I have been in those meetings. You may be getting more money but your “value” as a staff member is far less than it was. They not only know you are willing to leave; they know you are capable of leaving. That scares the crap out of companies because they have to have someone do the work. If not you then someone new, or other staff pick up the slack.

A counter offer is a hedge for them, they aren’t happy about it. This isn’t a performance review; you are essentially forcing their hand. The reasons you are leaving? They haven’t gone away, unless it was exclusively money but it’s rarely that. Never accept a counter offer unless you are a very high level executive as those circles are very small. Regular employees like you and me? Move on.

Thank you for coming by and supporting my blog I really appreciate it. Want to see another post like this one? Click here.

One key thing to do to getting the job you want

It’s a hot job market right now in the west, at least in the U.S. where I am. Employers are throwing all sorts of incentives at people. Why this is happening is a complex mix of covid lockdowns, early retirements, people getting other jobs, supply shortages, you name it. So as someone looking for a job you are in a fantastic position. Changing jobs is the single best way to increase your employer based income. Simply put, when you get a new job you likely do so with a 5-25% increase in pay.

Promotions happen too, but it’s not as likely as you going out and getting a new job for more money. How do you get the job you want though? It’s one thing to get another job, there are plenty out there and chances are you’ll make more but how do you get a job you really want?

Before I answer that question we have to be clear here. I want to be a base player for a rock band and play in front of thousands of people. That’s not going to happen, lol. The “key thing” only applies to realistic career expectation. If you are a financial planner and you want to be a brain surgeon this probably won’t work.

For those of you who are closer to the mark, maybe you are a carpenter and want to run your own crew, or you are a warehouse worker and you want to get into management this tip can help.

Careful for what you wish for, you might get it.

So how do you get the job you want? 

You have to ask for the job.

I know sounds WAY to simple doesn’t it. Here’s the thing, asking the question starts the ball rolling. You are planting the seed now, so you can harvest the bounty later. Whomever has the ability to give you the job you have to ask them for it. Every question you don’t ask is a default no anyway so there is that but asking this person that question helps them, help you get that job.

How you ask

  1. “What can I do now to better prepare me for (insert new job name here)”
  2. “I’ve been working hard and improving my skills so I can eventually move into (insert new job name here) my best guess is 2 years from now, that sound about right?
  3. “I see myself in this role (insert new job name here) as part of my career path, do you think I am going to be a good fit for it?”

There are many other ways to frame this dialogue, you have to find what works for you but the point is you need to ask the question, directly or by inference. This can be done during interviews, annually performance reviews, whenever you feel it’s the correct time. The one major caveat is, you have to be asking the right person.

You know who they are, you know who has the ability to put you in a position to get the job you want. This is by no means a full proof system but by asking the question, you put it out there for you and the universe to know that’s what you want. It’s empowering and it puts anyone who hears the question on notice. In today’s work environment that’s huge, now is the time to go after the role you want. It’s a sellers’ market, you are in demand.

Thanks for coming by and supporting my blog I really appreciate it. Want to see another post like this one? Click here.

Remote work and Anxiety

Welcome to the new normal, whatever that is where you are, for this particular moment…. I know that’s ridiculous semantics start to the blog but the “New Normal” won’t be normal for long. However we have picked up some material changes along this Covid journey we are all on. One of them is the New Normal of working from home. As an example, myself, I haven’t been back to my office since 3/18/20. I work in a capacity now where I do a lot of meta data crunching, analytics and budget forecasting. As long as I have the data I can do this anywhere and my company as deemed people like me to be “flex staff” that means I can work from home, indefinitely. I’m happy about this, but many people out there aren’t.

I found a good article here That discusses some of the nuances with working from home and a new anxiety paradigm around the issue.

From the article: “Just as offices begin to reopen or at least contemplate doing so, a new study suggests that remote work is taking its toll on our collective nerves. Nearly half (47%) of workers say they are experiencing anxiety because of remote working — and among those, two-thirds (66%) say it has crushed their productivity.

The findings, based on responses from more than 1,000 remote workers in a survey by the Omaha-based insurer Breeze, is yet one more bit of concerning news for employers already working overtime to stay on top of the well-being of their people as the pandemic persists. Among other findings in the survey, 52% reported depression, while nearly as many (46%) experienced panic attacks. As a result of remote work anxiety, 57% have sought out professional and/or medical help. More than four in 10 said they suffered from remote work anxiety because they were working too hard or too many hours — worried their employers might think they are slacking off. Of those suffering from remote work anxiety, 43% said they planned to return to the office because of it.”

That’s a big quote and it says a lot. Now the sampling for this survey was 1000 workers which is a decent sample but I would have preferred 10K then we would have some very valuable statistics. One of the things that work does provide you with is an additional social outlet which is now, for many of us gone.

When life gives you Lemon’s, make Lemonade

Now I understand there are plenty of negative social interactions at work, it is a hub for humans to get together and interact. For those of us with Anxiety, work places can be a very safe place to be. You have social rules, there are many rules of engagement, you have clear expectations as to your role etc. We can’t minimalize this as a benefit as many with Anxiety thrive in structures social environments and work is one of those key venues.

For the last nearly 2 years now that has either been removed or altered and that has placed many of us in new situations which is uncomfortable. The article does a decent job of illustrating the issue and providing some guidance as to how to combat it. Couple this with the “Great Resignation” and companies scrambling to fill roles and the work dynamic has changed dramatically.

Is this the “New Normal?” I don’t know but I do know that the upheaval caused by Covid 19 is going to be with us for some years to come. As individuals with anxiety it is paramount for us to find a way to cope, survive and thrive. You can do this, remember, one day at a time.

Thank you for coming by and supporting my blog I really appreciate it. Want to see another post like this one? Click here.