![]() Of course, if your income shrinks or disappears, you might be in trouble. It makes us feel better to see our purchasing power growing over time. If your income rises by a percentage greater than the inflation rate, you'll be able to afford more goods and services. If your income goes up by the same percentage as the inflation rate, your purchasing power is not diminished. Social Security benefits, too, are subject to Cost of Living Adjustments (COLAs) that take rising prices into account. In theory, salaries and wages should rise to keep up with inflation so that workers can maintain their standard of living. Your money won't stretch as far and you'll have to make some changes to your budget. If your income stays the same while prices go up, you'll feel the effects of inflation.
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