Depending on what sources and metrics you use, the annual inflation rate in the United States right now is somewhere between 6% and 11%. That means, if this trend continues, prices will double in roughly nine years, then double again nine years after that. No matter how well you’ve planned for the future, when the cost of everything increases at that rate, it’s worthwhile to at least consider some options for hedging against it.
Here are some small – and some very big – lifestyle choices you can make to help protect your budget from some of the inflationary pressure around you.
Start a garden
A garden hedges against inflation in food prices, particularly if you focus on perennials (like asparagus) and on heirlooms that you pollinate yourself (like tomatoes). Once you’ve invested the initial cost and develop a system for replenishing things (composting, etc.), you can drastically and permanently cut your vegetable costs.
Learn how to make as many meals as possible from basic ingredients
The inflation effect multiplies when it comes to prepackaged foods – each middleman will have to bump up their costs to both account for increases from their provider and maintain their own profit margin. Thus, it’s a net benefit for you to cut out as many food middlemen as you can. Learn how to make basic foods, like homemade bread, and buy the staple ingredients you need in bulk, like giant bags of flour that, if kept in a dry place, will last for a very long time.
Make most or all of your beverages from the tap
Instead of following the spiraling costs of beverages at the store, focus on drinking more water from the tap. While you’re still going to face some inflation here, an inflationary increase in a gallon of tap water is a lot less painful than the inflationary increase in virtually every beverage you might buy at the store. Or, you can get more extreme…
Drill your own well
If you live in a more rural area, you may be able to drill your own well and almost completely eliminate your water costs. While the startup cost might be fairly high, you’ll have a steady supply of essentially free water. We had a well when I was growing up, and my parents still use it for outdoor use, such as watering the garden.
Reduce your home energy use
Every little choice you make to reduce your home energy use hedges against inflation. As prices for energy go up, the savings that devices like LED light bulbs, ceiling fans, and programmable thermostats contribute to our bottom line increase as well. Every little bit helps, especially if it’s a “do once, use for a long time” solution like a ceiling fan. If you want to go really big, though…
Invest in solar panels or a small wind turbine
These devices can drastically reduce or even eliminate the amount of energy you need to pull in from the electrical grid. Here in Iowa (and in many places across the Great Plains), wind turbines are becoming something of a common sight along the horizon, and solar panels can be put into use almost anywhere. Even in the simplest scenarios, where solar power is used for the energy for outdoor lighting or for other small things, can reduce your energy costs over the long haul.
The less you drive, the less you’re affected by escalating gas prices. Finding new routines that involve less driving are thus going to make you more independent of inflationary pressures. For example, if you start carpooling with the guy down the block, you’re suddenly reducing your gasoline usage for commuting by half, which means that the effect of inflation will be less. Move to public transportation and the effect is even lower.
Buy a more fuel-efficient and reliable automobile
The next time you have to purchase an automobile, don’t focus on the pleather seats. Instead, focus squarely on two factors: reliability and fuel efficiency. These two factors will make your car far less dependent on If you take some giant steps and have an electric car and power your own home with solar and wind … well, then inflation is leaving you alone.
Buy plenty of “forever stamps”
This is a very simple method to handle inflation, as a few books of “forever stamps” will weather any postage rate changes that might occur. Buying a sufficient amount now – particularly just before a rate change – can hedge against inflation for a long while.
Learn to entertain yourself with open-ended materials
If you’re a member of a bridge-playing group, guess what? Your entertainment is not going to be affected no matter what inflation does. If you like to read and can walk to the library, inflation’s not going to affect your hobby. Love to write and have a functional old computer? Your passion is going to be unaffected by inflation. There are countless hobbies that don’t require much financial contribution at all – find one that sticks with you and you’ll not be bothered by inflation much at all for your entertainment needs.
The best part about these inflation hedges?
They’ll save you a lot of money even if inflation isn’t an issue at all. So start hedging inflation by making a few strong lifestyle choices – your future wallet will be glad you did.