GET COACHED BY WILL FREEMEN AND BECOME THE MAN YOU WANT TO BE

The 3 Best Ways To Beat Inflation

When it comes to money, most guys have their priorities backwards. They want to give their money away to wall street or flushing it down the toilet on speculative investments, before they even handle the basics.

The basics are:

  1. Getting control of your income and build a money machine
  2. Getting your taxes as low as possible
  3. Getting control over inflation

Inflation is the expansion of the money supply, which leads to more currency flooding the market, and therefore that currency having less value over time.

The average official “inflation” stats in North America are 3% a year (although some experts estimate it being as high as 10%). This is a massive problem in terms of you winning the money game, although one that many people don’t even recognize.

Let’s say you have $100,000 in savings, using this inflation calculator at 3% per year, at 10 years in the bank, your purchasing power will be reduced to $74,409.39. That’s almost 30% of your wealth being taken from you. And that process only becomes more extreme over time, that’s why your grandmother will tell you that she used to be able to go to the movies for a nickel.

To get rich, you need to get inflation handled. Here are the 3 best ways:

1) Spend money as soon as you get it

This is in contradiction to most of the penny-pinching financial gurus out there, but the truth is, the best way to beat inflation is to spend your money as soon as you get it, that way your purchasing power doesn’t have a chance to erode over time.

Now, I’m obviously not saying spend all your money, I firmly believe in following your budget and saving a good chunk of what you make every month. With that said, spending a portion of what you make now is a good way to get the full value of your dollar.

First you can spend on your monthly expenses, but you can also do things like buying your supplies a year in advance in bulk. Or paying your rent a year in advance. Or paying your bills a quarter or a year in advance.

Not only are you avoiding inflation, but paying bills in advance is a great savings technique, because you know your money is immediately going to productive things instead of racking up your bar tab. Another option is to reinvest that money back in your business, so not only are you beating inflation, you’re utilizing compound interest, see below.

2) Put your money into your high margin business

If you don’t have a business, you need to start one. And if you don’t have a high margin business, you’re in the wrong business. For most guys I recommend a service based business.

As covered in point 1, taking your profit and reinvesting it in your business is an excellent way to beat inflation, especially when you’re in a high ROI business. I’d be hard pressed to think of a better thing to do with your money than reinvesting it back in yourself at a high rate of return.

3) Put Your Money Into An Income producing asset:

Once you’ve maxed out your investment in your business (or ideally businesses), you can beat inflation through investing in income producing assets like bonds. If you can get corporate bonds paying out 5% you’ve beaten inflation buy 2% a year, which doesn’t sound like a whole lot, but it definitely adds up over time.

Another option is real estate. I don’t like it for a number of reasons, especially in the west. Mostly because you need a lot of cash, a lot of time and a lot of sophistication – Grant Cardone is a great example of a guy with all three who has done very well in real estate.

With that said, for guys with more modest cash flows, for $50,000 you can get a nice condo in my part of the world (South East Asia) and AirBNB it out at a premium price. 7% cash flow and more is possible without having to drop a ton of cash or go into debt – easily enough to beat inflation, plus you hedge into a hard asset away from fiat currency (something you don’t get from bonds).

One Last Point

In the 3 above options I’m talking about beating inflation, not hedging. Hedging between gold/usd/euro/crypto or any other currency or asset is not a bet against inflation per say. It’s an important area, especially if you live outside of the country in which currency you get paid in, but it’s not a way to beat inflation. I can by Thai Baht as a hedge against USD, if I think the USD will weaken over time against the Thai Baht (which I do), but that’s a move based on the dollars purchasing power against other currencies and commodities, as opposed to a pure inflation play.

Conclusion

Hopefully you’ve got some good strategies to put into play to beat inflation, just make sure not to get too stressed or overwhelmed, especially if you don’t have much money or a functional business. Just keep the strategies in mind for the future and and them to your financial plan.

If you’re just focused on savings for the next few years, don’t worry about taking that 3% hit a year, it’s not that big of a deal, especially when you’re building up your war chest. Just don’t let it sit for 10 or 20 years where you’re losing 30% to 50% of your purchasing power.

       
  1. What if I can’t picture myself doing/enjoying any type of business?…while I agree with you that its important to make a good amount of money, I just could never see myself starting some business because honestly I have 0 interest in any type of business out there. Every business idea I’ve come across seems bland and boring to me. Am I just supposed to be miserable but start a business anyway that I can’t stand to do in the first place?

  2. I would find what you hate to do the least, and then link the passion to the money/deals coming in, thats what I did in sales, selling products I didn’t care about

  3. Inflation is a terrible thing, in fact it scares me daily. But with proper tools and mindset you can outrun it and in some cases even take advantage of it. This was excellent Will, thank you for the advice. Most importantly: as long as we stay true to ourselves(our business) and we reinvest in it, rather than spending our money on stupid shit, we can outrun inflation every time. :) Keep it up.

  4. Yes, REAL inflation is likely to be much higher than the 2-3% the US and Euro govt’s officially admit.

    Do you think buying physical gold and silver can be a good long-term hedge against inflation?

    Thanks for all your articles and videos on finance and investing. They’re all excellent!

  5. Thanks Andy, and I agree inflation is probably higher. And yes it’s possible, but for me it’s a no, trading for a living taught me I have no idea where the market is going.

Your email address will not be published.