Money Matters with the IFA Company
Money Matters with the IFA Company
There’s so much talk about rising inflation in the news at the moment, but what does it actually mean in real terms? The IFA Company’s Lucy McKinley explains what inflation is and how it impacts our finances.
What is inflation? Inflation is a measure of the increase the prices of everyday items and services such as food, clothing, fuel, and takeaways over the previous 12-month period. The way inflation is reported often makes it seem like inflation is responsible for price increases, but there are underlying factors that increase prices such as economic and political factors.
Why is inflation so high at the moment?
We’re currently in a period of rising inflation, with the rate of inflation at a record high. There are obvious reasons for this such as the increase in fuel and energy prices. There are also less widely reported reasons, such as a sharp increase in the price of pasta, a stable food for many, at the start of the year.
How does inflation impact my everyday life?
Inflation is the result of higher prices, which result in the purchasing power of money dropping. So, your money will buy less today than it did last year. If your income isn’t increasing at the same rate of inflation, you will find that you’re financially worse off than you were in the past.
How does inflation effect my savings and pensions?
The purchasing power of savings is reduced by inflation in the same way as income. If the value of your savings and pensions isn’t growing at the same rate as inflation over the long-term, then the real value is falling. We talk to lots of clients who are concerned about inflation-proofing their finances and we always recommend investing cash savings. We also advise on maximising pension income and tax efficiency to ensure pensions can keep up with rising inflation.
If you’re worried about the effects of inflation on your savings and pensions, get in touch to find out how we can help inflation-proof your future. You can call us on 01946 821150, email [email protected], visit www.ifaco.co.uk or find us on social media Cumbria
