Why Inflation Is More Than Just Inconvenient... It's Keeping You Impoverished
Yes, most all of these price swings are due to the COVID-19 pandemic and supply chain disruptions, but knowing this doesn’t make things any easier on our wallets. At the end of the day, we have less money to spend on what we want because we are paying more for what we need.
While we grimace each time we have to spend significantly more on these items than we did last year, the problem is not just about the inconvenience of inflation. It’s much more than that.
Inflation is the continual upward movement in the overall cost of services and goods, which results in decreased purchasing power in an economy. In the simplest terms, it refers to how the prices of things go up year by year. However, what happens when the prices of goods and services go up but our income does not?
For example, if your income was $60,000 in 2020 and you paid $40,000 in expenses, you were left with $20,000. However, if your income was the same $60,000 in 2021 and you paid $50,000 in expenses, you would be left with $10,000. The answer to the question is clear: if inflation continues to rise – and it will – and your income does not, you’re going to become poorer and poorer year after year.
The key to countering the sharp rises in inflation that we will continue to see in the years to come is wealth building. We must strategically build wealth now by growing our money in such a way that it significantly outpaces the rise in prices of goods and services in our economy. Simply saving more money and finding a better paying job are not the answer, because neither of these grows our money. We must also create streams of passive income through activities like investing (real estate is a good option) and entrepreneurship.
Unfortunately, most Blacks have either a low or negative net worth, which means that they are not keeping pace with the high prices of inflation. Wealth building positions us to afford higher prices and still have a surplus left over that we can invest, grow, and pass on to future generations. If we do not build wealth, we will only continue to spend more, have less, and descend into the depths of economic impoverishment. We must shift course and begin building wealth NOW!
Don’t know where to begin to start building wealth? Start with the Black Money Tree! The Black Money Tree is a personal finance philosophy delivered through a curriculum that empowers Black people with the education, support and resources they need to understand and build wealth and to achieve both individual and collective economic sufficiency for generations to come.
We invite you to listen to our Black Money Tree podcast by visiting blackmoneytree.com, where you can listen to previous podcast episodes featuring guests that share practical knowledge and strategies about how to begin building wealth in the Black community. The Black Money Tree is produced by Jerome D. Love in partnership with the Texas Black Expo.