Monday, July 16, 2007

Are your salary increament beating the inflation rate?

You may find that your increment for this year is just 5% -6%. You feel happy and would like to treat yourself with nice food in local hawker stall. When you order the food, you may find that the price has increased. You will also shock to know that the herb tea you used to drink also has increased it price.

You then just say, never mind, it is just for 10 cent to 20 cent increment for the drinks, and may 50 cents increment for the food. It is just alright since you have an increment in salary recently. However, if you calculate clearly, you may find that the the price is increased that higher than your percentage of the salary increment.

For example, the herb tea, it become RM 1.10 since last year due to the spike of the oil price that hit the history high. However, the price keep on become stable although the oil price drop. Recently, the price has up to RM 1.20. Just imagine, a RM 1.00 drinks has increase into Rm 1.20. It is a 20% increment of the prices. Do we really aware of it?

For the fried rice, may be the original price is RM4.50 with a sunny shine up egg. That's mean you need to have extra RM 0.50 fo the egg (Normal fried rice is RM 4.00). However, some restaurant has increased it into RM 4.80, with the add-on egg for RM 0.80. The single egg itself has increased for 37.5% from RM 0.50 to RM 0.80. Does our salary really beat all those inflation ?

We may hear that this consumer item increase for RM 0.10 or RM 0.20, but if we look at the percentage of the increment, it may even higher than what we have in our recent salary raise.

Even the tol have increased. Some tol increase for more than 35% as compare to last year. Oil price also have increase during last year for more than 18% since last year (RM 1.62 to RM 1.92).

After reading until here, you may find that I am too calculative for every item in the live. And then you may say that some item also decrease in the price such as LCD TV, hand phone, and other electronics stuff. The price for the car also very attractive and lower as compare to last time. I could not deny that those items have decrease in price, however, those item will keep on depreciate the value during the time passes. The hand phone you buy today may depreciate down to 50% if a new model is coming up to the market.

In here, I am not saying that the salary we have are not enough. Just that we need to invest our money in order to make it worth and would not depreciate in a long term run. With the correct financing planning and investment tool, we can secure our money and increase the value of the money we earn today.

I am not an expert in those thing yet. I still in the beginner stage. We all need to start to learn how to do the financial planning now.

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