Personal Finance for Inflationary Times - Chapter 1: Goalsetting during Inflationary Times

Chapter 1: Goalsetting during Inflationary Times

Most people have some idea of the type of life-style they want to achieve. Some want to think and grow rich. Others are happy with enough money to put their children through college. Still others want to travel and see the world. Many young people just want to get out of the debt they incurred in school. No matter what your circumstances, the first step is to set your priorities, set reasonable goals, and then break those goals down into bite-size pieces.

For some people, goal setting is easy. For most people, the hard part is achieving goals. For some people, writing lists with times next to each item is helpful; for others, simply a list will do. For some people, setting aside a specific amount of time to work on a specific project works. Some people need to work with others to stay focused and motivated to work toward a specific goal. Still others work without goals, putting out the hottest fires first. Affirmation is another tool used for reaching goals; i.e., the process of visualizing a specific goal, writing it down, and repeating it (whether in writing or spoken word) daily.

There are self-help books with a plethora of ideas that the authors probably found helpful in their own lives; however, none of the ones I’ve ever seen talk about how inflation can affect goal setting and achieving those goals.

During times of inflation, if goals are measured in terms of money or money is needed to achieve those goals, goalsetters must be mindful that the yardstick with which goals are measured is ever-changing; therefore, an adjustment must be made. The college education, the trip to a distant land, the new car, and the food on the table all will cost more as inflation takes its toll. In the long run, if the currency in your country loses its value precipitously, more drastic measures may be required to achieve your goals.

As calculations become more difficult, you may have to revise your goals to compensate for the increased difficulty of functioning economically during politically driven inflationary times. In fact, if inflation becomes excessive, dealing with its mal-effects may over-shadow your other goals. The cost in time spent compensating for the inflationary effects may become considerable. Comparative shopping, investing savings wisely, avoiding shortages, and minimizing taxes all take more time as the inflation rate increases.

The job that requires you to commute a greater distance may not be worth the extra pay because of the cost of the commute. The business you wanted to start may cost more than you had allotted in your business plan. The variable rate loan you used may cost more in the long run than you thought. Your savings probably won’t buy as much as you had hoped. Your children’s education may cost more than you had planned for. Your health care costs may rise faster than your income or insurance coverage. The funds you or your heirs receive late in life or upon death may not purchase as much as you had hoped.

No matter what your goals, it is important to consider the effects inflation will have on your finances and prepare for it. To be forewarned is to be forearmed.