What to Spend On When Inflation Is High?

Hey Everyone! I need a little help. Last week, I received a question about inflation spending. Basically, the reader asked if there is anything we should buy ahead of time to head off future inflation. I did some research and only came up with a few things. Okay, here is the question (edited for clarity) and I’ll share my thoughts after.

My wife and I thought of an idea to buy things early that could help avoid future inflation. For example, we bought new bed sheets and left them unopened. Imagine you want new bed sheets every 5 years. If you expect to live another 50 years, you could buy 10 sets of bed sheets and you’re set for life! Obviously, we can’t buy everything – especially food.

Question / topic for a blog: What are the things we could buy now to help avoid future inflation?  The one big item is a house. We bought our “forever” home when we thought of this idea and that will likely turn out to be a fantastic idea. What else though? Are there things we could buy now that we will want in our 50s, 60s and beyond? What things are easy to store and don’t take up much room? Have you ever thought about this?

Good Buys

Whoa, that’s a tough question for me because I dislike spending money. The obvious answer is a house. If you purchased a home before 2021, you locked in a great interest rate and probably a pretty good price. Many homeowners refinanced and got a great rate as well. Those locked-in rates are lower than inflation today. That’s free money! I don’t think there is any purchase that comes near this fantastic value. But, I thought long and hard and came up with a few things to spend money on.

  1. Home remodeling. If you’re in your forever home, remodeling it to suit your needs is a great idea. You spend once and you’ll get to enjoy the result for many years. If you wait, remodeling will just get more expensive. It might not have a big monetary return, but it would make life more enjoyable.
  2. Health. Anything that improves your health is worth it. For example, a home gym would improve your health if it helps you exercise more frequently. It’s worth it to be healthier while you’re young. It will only get more difficult as you age. I just had my annual physical and the doctor prescribed a drug to lower my cholesterol. 🙁
  3. Wine. Mrs. RB40 came up with this one. If you’re a wine drinker, building a wine collection might be a good way to spend. Unlike my health, the wine will improve with age.
  4. Membership? I’m not sure about this one. A lifetime membership to something you frequently use might be a good idea. Usually, there is a discount if you pay ahead. For example, a lifetime membership in the AARP costs $200. The annual membership cost $16 per year and probably will increase soon. Did you know you can join the AARP at any age? This might be a fantastic buy if you’re young!

That’s all I’ve got. Do you have any suggestions?

Barriers to spending ahead

Buying ahead is tough for me because of our mindset. We are trying to be more minimalist and I dislike spending money. Buying more things is contrary to our goal. I just don’t believe in spending unnecessarily. We buy what we need and don’t plan beyond 5 years. It’s a problem for us in several ways.

  • Storage: We don’t have a lot of storage space at our home. Mrs. RB40 has been giving stuff away on the local Buy Nothing group and we still have too many things at home. Both of us want to clear up the clutter in our house and buying more stuff won’t help.  
  • Degradation: Mrs. RB40 said things that have been in storage for 20 years will degrade. Even if you store it well, it won’t feel new. Also, life is unpredictable. A natural disaster can ruin your storage area and those sheets. Why take on extra risk when you don’t have to?
  • Tastes change: Another reason why I don’t like buying ahead is that my taste probably will be different in 10 years. I already have a closet full of clothes I wore years ago, and I don’t wear them anymore. It doesn’t seem wise to buy extra stuff with my track record.
  • Circumstances change: Also, life constantly changes. We are thinking about replacing our queen bed with 2 twins. This should improve our quality of sleep because Mrs. RB40 has become a sensitive sleeper. What would I do with 10 sets of queen sheets then?
  • Relocation: We plan to move after our son goes off to college. More stuff = more pain.
  • I can’t find anything: (From what I understand, this is a common problem for men.) I have a difficult time finding things in our home. I always have to ask Mrs. RB40 where something is. This month, I asked her to help me find the honey, caulk cap, tomato sauce, and several other things. Adding more stuff would only exacerbate this problem.
  • Equities beat inflation: Historically, the stock market returns outpace inflation. This isn’t true in 2022, but eventually, the stock market will come back. I’d rather invest the money than buy things that I might not use.

High inflation changes buying habits

Generally, high inflation causes people to downgrade their purchases. Consumers tend to buy cheaper stuff so their spending doesn’t increase as much as the CPI. Buying ahead could also alleviate price inflation. However, there is the opportunity cost. Usually, it’s better to invest than to stock up on consumer goods. Investment is appreciating assets and it will help offset inflation and build wealth. Consumer goods are depreciating assets.

The world is changing though. Globalization is reversing due to Covid, war, geopolitical issues, and supply chain issues. Inflation might be with us for many years to come. Maybe it’ll be the right choice to buy a few key things now instead of waiting.

In conclusion, this buy-ahead strategy isn’t right for us. But it might be good for you. What do think? What can we stock up on to avoid future inflation?

Passive income is the key to early retirement. These days, I’m investing in commercial properties with CrowdStreet. They have many projects across the United States. It’s been working so well that I’m planning to sell our rental condo so I can invest more. Sign up for a free account and go check them out!

Disclosure: We may receive a referral fee if you purchase or signup for a service through the links on this page.

The following two tabs change content below.
Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.

Latest posts by retirebyforty (see all)

Get update via email:
Sign up to receive new articles via email
We hate spam just as much as you

27 thoughts on “What to Spend On When Inflation Is High?”

  1. Thanks for the great response Joe! I like the 4 good buys you came up with (or your wife, great wine idea that improves with age!). The whole idea kind of comes down to this… imagine you have $X and you are wondering if that is enough to live on the rest of your life (i.e. the FIRE concept). Inflation can affect the calculations but not if you could buy everything you’ll need the rest of your life! If I could buy everything now and never have to worry about money ever again, wouldn’t that be amazing?! That is the idea. It is kind of like a lottery winner. I always argue that if you won a lottery, you should never gamble on stocks. You already have enough money to live the rest of your life. Why risk anything if you already have enough to buy everything you want?!
    I love the tools idea and collectibles and anything that helps you be more healthy or enjoy life more. As always, thanks for the blog post and great thoughts and ideas!

    Reply
  2. Yeah, now everything is getting more expensive, especially houses and cars. If I had extra money, I would definitely keep buying more index funds. This is probably a better way to beat inflation than buying material stuff.

    Reply
  3. Items that don’t depreciate over time would be worth buying. For example, a good set of quality tools will last a lifetime. Heck, I still use some of the tools my father gave me as a child. They still work perfectly today.

    I don’t know what he paid back then, but it had to be less than today.

    Items that depreciate quickly (cars, electronics, furniture, etc) would probably be a bad idea to stock up on.

    Reply
  4. we fixed up our attic/art studio about 5-6 years ago. when it was done we wondered why we hadn’t done it sooner as we had the money set aside for about 10 years it seems. it was such a a life enhancement plus we got energy savings from insulating too.

    that being said i don’t think i would buy too much ahead just because of inflation. like you said, joe, we don’t really love spending money either. i think we’ll just carry on the way we have for many years replacing items as necessary.

    Reply
  5. It’s hard to predict inflation, and to predict how inflation is going to affect the opportunity cost of that money you’re storing in sheets you’re not using. If inflation is 5% and the stock market is 7%… maybe you’re still better off buying the sheets when you need them. It’s just hard to know when the stock market is going to be 7% vs. -2%. What is Russia going to do? What is the Federal Reserve going to do? If you’re a member of congress you can get your spouse to take advantage of your crystal ball (which should be illegal but isn’t), but for the rest of us…

    With the exception of obvious things like locking in a 30 year mortgage back when they were at historic lows (too late now! also, we didn’t do it because we’d already paid off our mortgage and didn’t want a new house) trying to time inflation is like trying to time markets.

    Reply
  6. Solar panels is a big one. It can depend on your area and subsidies (which may be very good soon if not already).

    We went solar in 2015 and paid 16k for almost all our energy needs for the next 25 years. We essentially locked in electricity at $0.06/kWh and it was over 20 cents in Rhode Island. Electricity rates will be near 30 cents when October’s “winter rates” kick in.

    Bonus: Combine it with an electric car and lower you transportation costs.

    Reply
    • Yes! I was coming here to say this….Solar Panels + Heat Pump for heating and cooling. Electric utility rates continue to climb, and the price of oil is volatile. I use heating oil to heat my home in winter, and prices were as high as $6 a gallon this year, when I paid as low as $1.50 a gallon a few years back. Because my heating/cooling equipment (furnace & A/C condenser) was at or near end of useful life, a decision needed to be made and for me that decision was heat pump technology for heating, cooling, and hot water. A $20k investment that should pay back within 3-4 years at the current price of oil.

      Reply
    • Yes solar power and the heatpump that DTS mentioned too potentially good options.

      If your houe needs weather sealing and insulation thats likely the best place to start.

      Home energy efficiency in general is a good area to look at. Id’ first start with an evaluation of your home. This will tell you what your house needs and where to start.
      I got an evaluation for I think around $100. Someone comes to your house and sets up a big fan in the doorway so they can measure the air going in / out and tehn they look for air leaks and hot spots.

      And definitely check if the local utility has deals with rebates or if your state has tax incentives.

      Reply
    • This is a great idea! Although, it might now work that well for us. Our electricity price isn’t too high. According to the estimate, we might save $2,000 after 20 years. That’s not worth the $16,000 upfront cost, IMO. Also, we don’t plan to live here forever. Also, we can’t charge an electric car because we don’t have a garage. 🙁

      Reply
      • yeah, solar payback is long and not a very high ROI just looking at 20 year.

        What estimate are you looking at ?
        The generic calculator at Project Sunroof I’m aware of uses a relatively low inflation rate of 2.2% based on previous trends and the context here is a high inflation environment.
        Also I don’t think they hae updated tax incentives. Fed rate is back up to 30% ad theres an Oregon incentive too.

        Reply
  7. I haven’t considered buying ahead exactly for the reasons you mentioned. I do keep my home stocked with a good supply of food and other consumables so we don’t run out and have something for emergencies but it’s easy to go overboard. I still have some pinto beans from my prepandemic run though stores to stock up….

    Reply
  8. The best thing you could stock up on now:

    Canned goods.

    Anything your family really enjoys could easily be bought by the case now…prices are literally doubling, but some items can still be found for less. (I also like Amazon Warehouse for discount prices on these.) I’ve stocked up on corned beef hash and beef stew (2 brands we especially like) canned and jarred mandarin oranges and peaches…and sardines in mustard sauce. (For me, but Husband is starting to enjoy them, too.) Canned chicken, corned beef, crabmeat…these work, too, for soups, stews and casseroles.
    I also bought extras of Marie Callender chicken potpies (wonderful) and our favorite pizza.
    You’ll have to do some research to find the best prices — but even a few extra will be helpful in your pantry. Can you double your money in investments this quickly? Naaah…but you can, stocking up on frozen and canned goods.

    Reply
  9. Ah, I thought about this one deeply already. Rare books and other memorabilia with autographs!

    The pandemic limited in person events, which limited the supply of rare books with autographs. Hence, I will be buying these hard assets over the years for enjoyment and future profit.

    I found some of my ancient Chinese coins that I purchased in 1997 in the British museum! Surely, they are worth a lot of money now to be behind bulletproof glass encasements.

    Reply
    • That’s a neat idea. You can spend on something you like and it’ll be a form of investment. That’s a good way to spend if you are a collector. I’m more of a minimalist, though. Also, I don’t want to store valuable stuff at home. I don’t trust our neighborhood…

      Reply

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.