How to Guarantee You Beat Inflation and End Up Rich

Original article: 2022.  Updated: 2025.

So far in the 2020s we’ve had higher inflation than what we had during the 2010s, which was pretty low.

What happens to inflation next – we’ll have to wait and see.

And even though it’s been slowing down, the cost of many things has increased faster than normal – groceries, rent, and insurances come to mind.

So, are we just supposed to suck it up and feel poorer?  No!

Inflation isn’t just some external force that eats away at your money.  I mean, it is.  But it’s also a test.  A challenge.  And even an opportunity for those paying attention.

The truth is, inflation affects people very differently depending on the way they live. And once you understand how inflation works, you can position yourself to benefit from it and reap most of the upside, with little of the downside.

So, let’s walk through how to not only survive inflation, but actually beat it in multiple ways – while building a freer, richer life in the process.

Inflation is a game of personal sovereignty

Inflation is not optional.  But how much it affects you is.

That’s the part most people miss. Prices don’t go up in a fixed, universal way – for every expense, for every person.

It depends what you spend money on, how often you spend it, and what else you do with your money.

If you lock yourself into high-cost habits and succumb to lifestyle creep, inflation can feel like a sledgehammer.

But if you’re intentional about your spending, your income, and your investments, you can basically sidestep it completely.  At the very least, use it to your advantage.

You could think of inflation like a filter that separates robotic consumers from adaptable wealth-builders.

One group is waiting for someone else to fix the problem, complaining as if there’s nothing they can do.  The other is making tweaks, and taking simple actions that make the inflation numbers irrelevant.

You want to be in the second group..

The brutal reality is, if you’re not growing your income and wealth faster than inflation, you are, without question, falling behind.

But there are tons of ways to fight back that are within your control.

Let’s walk through the strongest levers you can pull.

Strategy 1: Shrink the problem

You don’t control CPI numbers. But you can largely control your personal inflation rate.

It starts with the power of substitution.

The RBA calculates inflation using a fixed “basket” of goods and services.
So, for CPI purposes, they assume you’re a robot – making absolutely zero changes even as prices rise – even if bananas go to $17/kg, or olive oil goes up by 50%.

But smart people don’t shop like robots.

We switch brands. We find alternatives. We reduce usage. We get creative.

Here are just a few things that can be flexible:

— Food: swapping items, cooking different meals, change shopping habits

— Utilities: switch providers, get more efficient appliances, change habits

— Mortgage and insurances: shop around, negotiate lower rates, switch providers.

— Transport/fuel: drive less, walk/bike more, plan multi-purpose trips, change cars

— Holidays: local instead of overseas, off season deals, avoiding the current most popular destinations

As far as food goes, I remember MMM called it ‘grocery shopping with your middle finger’ – I can’t think of a better way to put it!

You get the point. The more flexible you are, the lower inflation you experience.

When you see things jump in price, see it as a personal offence and a challenge.  What can you do to reduce the impact or sidestep it completely?

And sure, you won’t always be able to do it, but the philosophy is important.

We’re aiming to build the mindset of someone who doesn’t just accept things – but who does whatever they can to improve things and get the outcome they want.

Interestingly, as you optimise your spending and find more ways to save across each area of life, you’ll likely experience deflation rather than inflation.  It’s not unusual for a household to start out spending $100,000 a year and get that down over a five year period to $70,000.

This mirrors my own life.  Our cost of living stayed the same for almost a decade while we were working and saving.  In fact, it was actually lower in 2020 than it would’ve been in 2010.

Strategy 2: Avoid the upgrade cycle

Most people don’t think about this… but the inflation figures are updated every so often to account for changes in the average Aussie lifestyle.

The phones we buy.  Cars we drive.  Trips we take.  And so on.

But the average household habitually upgrades things in their lives.

This means the CPI figures include lifestyle inflation too.  So simply having some restraint in this area will see you affected less.

My long-held belief is that a fair bit of our spending is actually optional.  And when you give in to every little lifestyle upgrade, you’re more vulnerable to inflation.

Not only because more of your money is consumed by expenses, but because you have more ways to be impacted by rising prices.

Freedom and peace of mind lives in the gap between income and expenses.

By holding the line on lifestyle – or even dialling it back slightly – you can go a long way to sidestepping the inflation problem altogether.

The less you buy, the less it matters what things cost.

Of course, there’s another way to fight back… and that’s by earning more. Your income isn’t fixed – and even small changes here can make a huge difference.

Strategy 3: Increase your income (faster than inflation)

You can outpace inflation not just by optimising your outgoings, but also by maximising what’s coming in.

Even as you try to free yourself from the need to work, your job (or business) is still one of your biggest wealth-levers.

I’ve heard from two people just in the last six weeks who’ve increased their income by $20,000 or more.

One by realising “Hey shit I can actually make huge financial progress if I pull my finger out and get a better job”.  And the other by switching employers and finding a role that  pays better- they realised their skills were more valuable than they were being paid for.

Bulking up your income can happen in many ways – some we’ve discussed already and others we’ll discuss in the future.

It can be done through natural career progression and experience, promotions and ladder climbing, switching industries, starting a side business, and so on.

If it’s possible for a non-skilled worker like myself to make an extra $25,000 a year, it’s possible for most of you too.  You could probably do even better with some focused effort.

But the real magic that ensures you stay on the right side of inflation over the long run – is investing.

Strategy 4: Ride the faster horse

Inflation is largely a problem for people who sit in cash and never invest.

Holding money in the bank might feel safe, but it’s constantly being eroded.
Now, you might be able to keep up with inflation with an offset or high interest savings account.  But after tax, you’re getting nowhere most of the time.

So how do you make inflation irrelevant?  By investing in productive assets like shares, property, or businesses. These things actually benefit from inflation.

Companies typically have ‘pricing power’ and usually pass on their rising costs to consumers.  This turns into higher earnings, which fuels higher stock prices.

What about property?  Well, when building costs go up due to inflation, that leads to a higher ‘replacement cost’ of each property, which underpins prices.

And both property and shares benefit from people having higher wages, since it feeds back into what we can pay for housing and products or services.

Overall, if your investments return 7-10% per year, and inflation is 3-5%, you’re getting richer in real terms every single year – just from a static dollar amount invested.

And the best part is, your income from these assets grows due to inflation too.

Just think about what happens over the long term for disciplined investors as you build your assets.

When you’re worth $10,000, a $1,000 price rise equals 10% of your wealth – it’s a lot.

When you’re worth $100,000, it’s 1% – barely noticeable.

And when you’re worth $1 million, it’s 0.1% – completely meaningless.

You don’t beat inflation by moaning about it.  Instead, you make it irrelevant by outgrowing it. 

Your savings, investment gains and wealth growth will grow to be multiples of inflation – to the point where it doesn’t even matter.

Over time, your grocery bill, car rego, and takeaway coffee feel increasingly tiny relative to your wealth and investment income.  That’s the position you want to be in – and it’s exactly what happens if you follow the right process.

But inflation doesn’t just eat away at the value of your savings and cash.  It also erodes the value of debt.  And when used wisely, that can be a huge advantage.

Strategy 5: Use debt to let inflation work for you

Some people equate debt with personal slavery. But when carefully done, you can also turn debt into your personal slave – as a tool to more or less print money.

Over time, as dollars lose their purchasing power, debt also devalues and becomes cheaper in relative terms.

If you take out a loan to buy an investment property (or a margin loan for shares), inflation actually helps you over time:

— The value of your loan stays the same
— The asset value rises due to inflation and other factors
— The income from the asset rises due to inflation and other factors
— And the loan becomes easier to sustain or repay as your income and income from the asset increases

Now yes there are nuances here and risks to consider – but this is about the big picture.

Debt is how many people build wealth without really trying.  They purchased assets with borrowed money – and it felt expensive at the time – but as inflation marched on, incomes and values crept up and the loan became cheaper year after year (even if it’s interest-only).

The point here is, debt can be a powerful ally to keep up with and even beat inflation.  Just make sure it fits your timeframe, you buy quality assets, your cashflow is reliable, you don’t overextend, etc!

Adding to this, it’s worth zooming out to see inflation in the context of your personal capacity to pay for things.

Inflation in relative terms

If your wealth is growing faster than inflation, then over time…

— Your options increase
— Your stress decreases
— Your life gets easier
— And everything becomes more affordable relative to your position

If prices rise 4% per year, and your net worth grows 10-20% per year – which is very achievable during the accumulation stage – think about what happens…

Everything gets cheaper in comparison to your total spending power.

I know I’ve mentioned this message in various ways – like in this recent post about housing.  But it’s something most people overlook, dismiss, or forget about.

When your wealth grows faster than your cost of living, you can even increase your lifestyle and it still becomes more affordable over time, not less.

Inflation is almost like the world testing you. It’s poking you, asking:

“Can you beat me, or are you going to sit there and take it?”

It’s like a test of your resourcefulness and knowledge.

If, like most people, you assume it’s an unavoidable pain of life, you’ll feel squeezed.  But if, as I’m suggesting, you see it as optional, you’ll pile up a bunch of strategies and come out way ahead.

The hidden game you’re playing

Since you’re listening to this, you’re probably aiming to retire early.  Or at least have the freedom to decide how much you work, and what you work on.

But beneath it all, what you’re really trying to do is beat the system.
Think of it like a game.

Learn the rules and strategies and tricks to the game and you could be living a freedom-based lifestyle in 5, 10, 15 years.

The alternative is to sit and complain about it.  But those who do are simply playing the game incorrectly.  They’re announcing to the world that they’re consumers and nothing else. They’re just spending – that’s it.

Meanwhile, people that are building wealth don’t really care about inflation. If they realise the numbers at play, they realise it’s making them richer.

Inflation as a concept isn’t going away.  So there are two ways to approach it:

“How do I reduce the damage of inflation on my finances?” – this thinking is fear based and protection oriented.

“How can I benefit from inflation and use it to my advantage?” – this thinking is growth based and progress oriented.

In some ways, inflation is like a tax on people who refuse to adapt and refuse to invest.

Over time, it benefits owners, and hurts spenders.  Money moves, as always, from the stagnant to proactive.

You can say that’s unfair.  That it should be different.  But it won’t be changing anytime soon.  And if you want to become financially independent, you need to be on the right side of this dynamic.

Final Thoughts

Inflation isn’t something to fear.  It’s something to understand, adapt to, and approach productively.

If you just do a handful of things…

Keep your expenses under control and adjustable. Grow your income. Invest in a regular and committed manner. And use debt wisely where it makes sense…

Then you beat inflation by default!

In fact, you do far better than that. You end up creating a situation where you win no matter whether inflation is high or low.

Because regardless of what’s happening, everything gets cheaper in real terms relative to your wealth.

That’s the power of personal agency.  And that’s how you end up with complete freedom in a world that seems so volatile and scary to most people.

In short, build your finances and mind in a way that you won’t be shaken off course by small external factors.

You follow the recipe outlined that makes inflation irrelevant.

And the sooner you start, the easier it gets.

Here are some resources you might find helpful:

📘 My Book
Your complete guide financial independence in Australia.  Available on Amazon, Audible and Spotify.

🏡 Mortgage Broker
My personal broker – they’ve helped myself and many readers with home loans over the years (including debt recycling). Check them out.

💼 Financial Advice
For those wanting personalised guidance with strategy, super, tax, or retirement, I can now connect you with someone I trust. Find out more.

If you use the above services, this blog may receive a benefit at no extra cost to you. I only recommend things I use myself and genuinely believe in – thanks if you choose to check them out.