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Posted by admin on 2024-12-16 |

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Why Gen Z Should Care About Inflation (Even If They’re Just Starting Out)

Hey Gen Z! We know you’ve got a ton on your plate right now: exams, side hustles, social media, and figuring out what to do with your life. But there's something that’s creeping up behind you and could seriously mess with your financial future: inflation.

Don’t worry, this isn’t another boring lecture on economics. We're going to break it down in a way that actually makes sense for you. So, let’s get into it—what’s inflation, what’s happening in India right now, and why you should care.

First, What the Heck Is Inflation?

Inflation is when the prices of everyday things—like food, gas, rent, and even that killer pair of sneakers you’ve been eyeing—go up. This means the same amount of money buys you less than before. If you’ve noticed your favorite burger or chai has gotten more expensive lately, that’s inflation at work.

It happens when demand for stuff is greater than what’s available (think supply chain issues or a rise in wages), or when there’s more money floating around in the economy than what’s needed.

In short: Inflation = less purchasing power = higher costs for everything.

The Indian Inflation Situation Right Now (2024)

So, what’s the deal with inflation in India? Here’s the scoop:

Inflation is on the rise: In 2024, India’s inflation rate is hovering around 6.8% for the year. It’s still above the Reserve Bank of India’s target of 4%, which is the sweet spot for price stability. In the past few years, we’ve seen food and fuel prices skyrocket, making it harder to stretch that paycheck.

Food Prices: The prices of pulses, vegetables, and cooking oils have shot up. If you’ve been feeling the pinch at the grocery store, it’s not just your imagination. Essential items like wheat and rice have also seen sharp price increases.

Fuel Costs: Petrol and diesel prices are at an all-time high. This impacts everything—from the cost of getting to work or college to the price of goods in shops. If fuel prices keep going up, so will transportation and logistics costs, which means even your online orders could get more expensive.

Renting a Place: Rental prices are rising in big cities due to increased demand and limited supply. If you’re thinking of moving out or already paying rent, inflation might make things more difficult.

How Does This Affect Gen Z?

Okay, so we’ve laid out the problem. Now let’s talk about how it impacts YOU, the Gen Z crew.

1. Cost of Living Increases

You’ve probably already noticed that your monthly expenses are slowly going up. If you’re living in a metro city like Delhi, Mumbai, or Bengaluru, you might have to tighten your budget or even reconsider what you’re spending on. Dining out, entertainment, and your favorite brands may not feel as affordable as they did a couple of years ago. As inflation rises, it’s going to get harder to save money and stretch your earnings.

2. Salaries Aren’t Growing as Fast as Prices

For most of Gen Z, you’re just entering the workforce or still studying. The bad news: salaries aren’t keeping up with inflation. In fact, inflation can eat away at whatever wage increase you might get. This means that even if you get a raise, it might not be enough to match the rising costs of living.

3. Increased Debt

If you’re using credit cards or loans to finance purchases, inflation could make it harder to pay off those debts. Higher interest rates often follow inflationary trends, meaning you’ll end up paying more in the long run. Be mindful of your spending habits, and try to avoid accumulating unnecessary debt.

4. Job & Career Decisions

Inflation could impact job availability and career opportunities. Sectors that rely heavily on raw materials, transportation, and logistics may cut back or slow down hiring due to higher costs. If you’re eyeing a particular field, like tech or startups, inflation might cause some instability or lower salary offers than you expected.

5. Savings Will Be Harder

As things become more expensive, you’ll likely have to dip into your savings more often to cover expenses. If inflation continues to eat into your budget, you might find yourself putting less money into long-term savings or investments. That’s a problem because compounding interest is the key to building wealth—and inflation can slow down your ability to build those savings.

6. Pressure on Mental Health

Rising costs can also lead to financial stress, and if you’re already feeling overwhelmed by school, work, or the pressure to "succeed," inflation is just another layer of stress to deal with. Financial anxiety is a real thing, and it’s crucial to build a good understanding of personal finance to avoid burnout.

So, What Can You Do About It?

The good news is that you can take control of how inflation impacts you. Here are some tips:

Start Budgeting: If you haven’t already, get serious about budgeting. Track your expenses, cut out unnecessary spending, and prioritize savings. Use apps like Wally or YNAB (You Need A Budget) to help keep your finances in check.

Invest Early: If you’re just starting to earn money, don’t wait to invest. Stocks, mutual funds, and even gold (India's favorite asset) can help you hedge against inflation. The sooner you start, the better.

Learn About Personal Finance: Understanding how inflation works and how it impacts your spending and saving habits is crucial. There are tons of free resources online—YouTube channels, blogs, and courses—on personal finance. Take advantage of them!

Diversify Your Income: With inflation driving costs up, relying on one income source can be risky. Whether it’s freelancing, creating digital content, or starting a small side hustle, diversifying your income streams can offer more financial stability.

Stay Informed: Keep an eye on inflation and government policies. If prices keep rising, the government may raise interest rates, which can impact loans and savings. Understanding these shifts will help you adapt and make smarter financial choices.