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Why Inflation Makes Your Pay Less Worth And How To Increase Income Streams


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With inflation at a 41-year high and interest rates rising, Americans are struggling to keep up with soaring food and gas prices as well as the pricier housing market. Even with a tight job market that benefits workers as they have more leverage with their employers, living a comfortable life and being able to retire early seems like a far-fetched dream for many.

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Enter Jun Liang. The personal finance expert, Tik Tok, and Instagram, who became a “Point Millionaire” at the age of 26, is living big thanks to a few habits.

While speaking on Live Richer’s podcast, Liang shared a slew of tips. From how to fight inflation, to how to retire at 40 and how to get things for free, his recommendations are clear and easy to implement. During his podcast interview, he talked about the “money delusion,” how to get an impact boost and how we can get caught up in beliefs that are just marketing schemes.

Be aware of the concept of the illusion of money and your salary

First formulated by economist John Maynard Keynes, Northwestern Mutual states that the average person tends to display his wealth and income in nominal terms rather than in real terms. According to Northwestern Mutual, “Essentially, we may overlook inflation when making a range of financial decisions, from saving for retirement to buying a home.”

Liang said people tend to forget that this concept also applies when asking for a raise and people should adjust their inflation targets.

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The whole concept of the money illusion, [is] That when you think about your salary, you should, and you really try to… adjust it for inflation, so you still have the same purchasing power that you had 10, 15, 20 years ago or else you will end up behind,” Liang said.

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“There are always discussions about the wealth gap and ‘How do you bridge the wealth gap?’ There are a million different reasons why this happens, but I think one of the things that we as consumers can do is really understand, over the course of the year, that our money loses value, and so we should Our monetary and wealth targets are adjusting to inflation,” he added.

For example, he said that if annual inflation this year is 8.3% and you only get a 2% increase, you earn less.

“Next year is coming [and] inflation next year [is] Let’s say 2%, you [get] 2% increase [and] I’m still retarded. right? Because it’s kind of a vehicle against you, you’ll always be in the back. That’s why it’s so important for everyone to think about it in those terms,” ​​he said, adding that in today’s job market, where there are options, you can demand more aggressive wage increases.

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Increasing income streams

Liang believes that there are a few simple steps on how to increase income to achieve financial goals, that is, by increasing revenue streams.

“You have to pick up a side hustle,” he said on the podcast. “In terms of access to [some] Sort of an early retirement goal, the more income streams you can attract and bring in, the more possible.”

Liang – who has a full-time job – recommended one path that is currently working very well for him, and for many others, the creative economy, which is “in full swing”.

“You should be looking at creating content because it has greatly accelerated my ability and timeline to achieve this goal of retiring by 40 years, just on the revenue generated from content creation,” he said.

Plan for retirement by looking at real estate investments

Liang, who is an advocate of early retirement and aims to retire at 40, said that for him, this is important because it’s a way out of the corporate rat race “where you contribute to the company’s overall profits to some other entity, and sort of generate income for yourself so that you can buy back Your time to be able to do, what you enjoy.”

Before this new economy, to achieve his retirement goals, Liang’s path was real estate, which he considered an “incredible accelerator of wealth.”

“If you get tax benefits, you … gain equity, increase your net worth and obviously cash flow from real estate and appreciation,” he said.

However, he advises that if you are interested in real estate, be sure to account for variable expenses such as roof or furnace repairs, which can take a large portion of this additional revenue stream.

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Live Richer Podcast is a space created for people to challenge and manage their ideas about wealth, culture and money around the world. By exploring money concepts from diverse voices, listeners will be inspired to build better personal financial decisions. We give you the best personal financial advice to achieve more, save more and live richer.

About the author

Yael Biswati Kennedy is a full-time financial journalist with numerous publications, including Dow Jones, Financial Times Group, Bloomberg and Business Insider. She has also worked as Vice President/Senior Content Writer at major New York City-based financial firms, including New York Life and MSCI. Yael She now works independently and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare” with Dr. Sean Manion. (CRC Press, April 2020) She holds two MAs, one in Journalism from New York University and one in Russian Studies from Toulouse Jean Jaures University, France.

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