How to save money correctly taking into account personal inflation

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

What is personal inflation, what does it affect and how to calculate it - we will understand together with the experts of the Financial Environment project.

What is official inflation and why we don't believe in it

Inflation is a steady rise in the prices of food, gasoline, clothing, and other goods and services. Because of the increase in prices, money depreciates, and over time we can buy less for the same amount: you can buy 100 rubles less in 2018 than the same 100 rubles in 2017.

Inflation is calculated by Rosstat, and it is different every year. In 2016, it was 5.4%, in 2017 - a record low 2.5%, in August 2018 - 3.1%.

Why does it seem to us that prices are growing by more than 3-4% per year? This is because the Rosstat data is the official inflation on average in the country. Rosstat considers it according to the consumer basket - a set of more than 700 goods and services of the average Russian. And of course inflation differs from region to region.

If your consumer basket does not coincide with the official one, then your inflation will be different. And the more you differ from the average Russian, the greater the deviation of personal inflation from the official one.

This would all be very boring if it weren't for one thing: inflation eats up your money. If personal inflation is higher than the official one, then salaries and savings depreciate faster than the rest. At the same time, inflation can be overtaken if money is managed correctly.

To understand how this works, come on October 31st for the free lecture “How inflation affects our lives” from the series “Financial Environment”. Bank of Russia representative Zoya Kuzmina will tell you how to understand the news about inflation and make the right financial decisions based on it.

How to calculate personal inflation

Based on personal inflation, you can decide how to save and where to invest. But get ready: it will take time, patience and perseverance.

1. Make a list of expenses for the month

To calculate inflation, you must know your consumer basket and its value now and a year ago. Make a complete list of expenses for the month - this is your shopping basket. Record everything you buy and record the prices of the goods. The basket includes not only groceries, but also clothes, shoes, rent and utilities, cinema and theater tickets, ordering pizza, gasoline, travel on the subway, medicines, and an appointment with a doctor.

For convenience, break down all expenses by category: food, clothing and footwear, household goods, car, utilities, vacation, entertainment, medicine, personal care, educational courses. This way you will not get lost in the records and will be able to calculate inflation for each category separately.

2. Maintain a list monthly

It is advisable to make notes for several months (even better - a year, but we do not insist). This is in order to know how your basket changes depending on the season. For example, in the summer you spend less on vegetables and fruits, but more on recreation. In the fall you collect the children for school, in the winter you buy gifts for everyone for the New Year.

3. Calculate inflation

Inflation is the ratio of new prices to old prices for the same grocery basket. To calculate inflation correctly, you need to compare prices for similar goods from the same manufacturer. You cannot compare buying a T-shirt from H&M with buying a T-shirt from Zara, as well as the cost of tickets from Pobeda and Aeroflot.

So when you count inflation, take the set of goods you bought this month and remember how much they cost before. To help - an archive of supermarket catalogs on the Internet, last year's payments for housing and communal services, mobile applications of banks, taxis and ordering food that remember your expenses. And if you start monitoring prices now and record all your expenses, next year you will be able to accurately calculate personal inflation.

Let's calculate how much the prices for your grocery basket have grown:

1. Summing up food costs in the current month (Σ PTM)

Σ PTM = price of bread × amount of bread + price of meat × amount of meat, etc.

Let's say 15,000 rubles came out.

2. We calculate how much you would pay for the same products in the same month last year (Σ PPG)

To do this, take into account the goods from the basket of the current month, and the prices for them are last year. It turned out, for example, 13 800 rubles.

3. We count inflation

(RPI - index of growth in prices for products): RPI = (Σ PTM ÷ Σ PPG - 1) × 100.

IRP = (15,000 ÷ 13,800 - 1) × 100 = 8, 69%. This is your grocery basket inflation.

Similarly, you can find out inflation in other categories. If some expenses have not changed (haircut, manicure, doctor's appointment), then inflation will be 0%. It happens that goods become cheaper, then instead of inflation there will be deflation, for example -5%.

The more in your consumer basket there are goods whose prices are subject to changes, the more personal inflation will differ from the official one. Imported and agricultural goods are most susceptible to inflation, while essential goods are the least affected.

How to manage money taking into account personal inflation

1. Open a deposit in the bank

It is clear that it is better to save money - for a rainy day, a mortgage payment, a future pension or for the education of children. However, you can't just put money in your grandmother's box or keep it on a card. Even taking into account official inflation, they are getting cheaper. Use bank deposits and cards with interest on the balance. So the money will at least not be depreciated.

Let's say you opened a deposit in the bank for 100,000 rubles at 6% per annum. In a year they will turn into 106,000 rubles, but taking into account inflation, it will be possible to buy less with them. If inflation is 2.5%, then 106,000 rubles in 2018 are equal to 103,350 rubles in 2017. It turns out that your income is not 6% per annum, but only 3.5%.

Income without taking into account inflation is called nominal. Taking into account inflation - real.

Your personal inflation rate is 7%. You put 100,000 rubles in the bank at 6% per annum. Your profitability for the year: 6% per annum - 7% inflation = -1%. It turns out that 100,000 rubles have fallen in price over the year, although they have become 106,000 rubles. Roughly speaking, taking into account personal inflation, 100,000 rubles in 2017 turned into 98,580 rubles in 2018.

Important: if the interest on the deposit does not allow to negate the damage from inflation, you can invest in other financial instruments. But we must remember that only bank deposits are insured by the state (up to 1.4 million rubles). And the higher the potential profitability, the higher the risks of losses.

2. Buy securities

Securities are, for example, stocks and bonds. You can buy them on the stock exchange and receive passive income. The profitability of securities is usually higher than the profitability of a bank deposit, but it is impossible to say exactly how much you will earn.

For example, the profitability of Apple shares. Apple shares in Tinkoff Investments. for six months - 22, 91%, LUKOIL Shares of LUKOIL in Tinkoff Investments. - 19.92%, NOVATEK NOVATEK shares in Tinkoff Investments. - 60, 66%. Even after adjusting for inflation, it can be profitable to invest in stocks. But their prices are constantly fluctuating, so such investments only make sense over a long distance.

Be prepared for the fact that investing in securities requires careful attention, some knowledge or willingness to spend time learning. In order to make investments in securities even more profitable, you can use an individual investment account (IIA). If you open such an account and perform transactions with securities through it, you can receive an additional bonus from the state in the form of a tax deduction.

There are two types of deductions:

1. 13% of the invested amount. The maximum amount for which you can get a deduction is 400,000 rubles. For example, if you put 400,000 rubles on the IIS, then next year you can return 13% of this amount - 52,000 rubles.
2. Securities income is not subject to income tax of 13%. This deduction is suitable for more experienced users and for those who do not have official income to pay tax on.

But it is important to take into account that you will be able to withdraw money from IIS only after three years, otherwise the benefits will not work.

3. Invest in yourself

If your personal inflation is higher than the official one and you do not know how to dispose of free money, then invest it in yourself. Your education, health, inspiration. The money will pay off: get a promotion at work, feel better and get sick less, find a goal and be more productive.

If you want to learn more about how to overtake inflation and keep savings, then come to the free lecture "How inflation affects our lives." It will take place on October 31 at the ZIL cultural center. To have enough space, you need to register.