The Biggest Financial Threat To Working Professionals

The Biggest Financial Threat To Working Professionals

As working professionals, we have much to manage: our current work responsibilities, staying on top of our professional growth, family life at home and a changing world. Most of us work daily as a means to provide for our families and living needs. Especially now, due to rising values and surplus money we may feel richer. But are we really?

It is a well-known fact that prices of just about everything are going up ridiculously. That includes assets such real estate, equities and 401k balances, but it also includes those things that take money out of our pocket each month such as groceries, food and clothing. Pay attention to the rising prices. Do you feel richer?

Americans spent the last year buying discretionary items with noticeable enthusiasm. Home decor, cars, vacations are just a few examples. Do we have more money to spend? Maybe, for now.

My theory is while many are not observing the rising prices of living expenses, they feel the immediate surplus of “wealth” which gives them confidence to buy more discretionary items freely. This is what the government wanted and is in many ways a good thing as consumer confidence drives the economy.

But what about the imminent rise in prices of everything from health care to taxes and insurance to good and so on? We must pay attention, because unless we are getting steady 5% raises every year…we are not wealthier; in fact, our margins are shrinking. That’s right, the biggest threat to workers is inflation and rising prices on just about everything.

Recognizing this issue, what are we to do? Well, awareness is key, and that awareness can help drive better decisions. These decisions mean more allocation of income to savings and investing. After having realized suitable savings for emergencies, workers should invest in assets that beat inflation, so that the value of their dollars are not being lost to inflation or rising costs of expenses.

One reason real estate is so awesome is because it can beat inflation. When purchased right, real estate provides both income and appreciation while offering tax advantages. With rents rising and the value of the dollar on continuous decline, the fixed debt used to acquire real estate remains the same and over time it is paid down in tomorrow’s cheaper dollars, meanwhile income continues to rise as rents steadily rise. Savvy strategies such as these are not for geniuses, just those paying attention.

Life is challenging and so is hard work. But if we are going to work hard, rather than being left empty-handed, maybe its best to have something show for it.

What do you think?

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Rodney Robinson II

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