Inflation Is Not Your Enemy: A CPA Reveals What You've Never Been Told As a Barber

Episode Transcript

(00:00):
Inflation is not your enemy.
So I'm sitting in my barber'schair last week getting my cut
when one of the barbers in theshop says, Y'all see YouTube TV
done went up to$83?" The shopowner, my barber, jumps in and
says,"Yeah man, everything'sgoing up.
It's inflation, right?" Nowreally quickly, I'm not just a
CPA who's worked with the IRS,over 70+ businesses in 17+

(00:21):
different industries.
I've helped real barbers buildreal wealth, and I had to tell
him what I'm about to tell you.
Basing your prices on generalinflation is one of the biggest
mistakes you can make for yourbusiness.
Imagine a community swimmingpool.
This represents the economy.
The pool operator decides to addmore water to the pool.

(00:43):
Naturally, as more water flowsin, the water level starts to
rise.
Everyone in the pool noticesthey have to adjust their
position.
Now kids in the shallow end haveto stand on their tiptoes.
Adults in the middle of the poolfind themselves floating higher.
Swimmers in the deep end barelynotice the change in the water
levels.

(01:04):
But what they do notice is thatmore people are coming to the
deep end.
This signifies that no matterwhat group you relate to,
everyone is affected.
As people adjust to the newwater level, they create
ripples.
These ripples reach otherswimmers.
Those swimmers then move andcreate their own ripples.
Soon, the entire pool isexperiencing ripples happening

(01:28):
all at once, turning smallripples into large waves.
This cycle continues until theoperator either stops adding
water to the pool or opening thedrain.
Now let's translate what thismeans for inflation.
Once again, think of the economyas a swimming pool, where the
water represents money and thewater level represents prices.

(01:53):
The pool operator adds morewater to the pool.
This represents the FederalReserve adding more money to the
economy.
Just like turning on a hose,they add money by lowering
interest rates and buying bonds.
Now there's more water in thepool or more money in the
economy, but the pool sizehasn't changed.

(02:16):
With more water and the samesize pool, the water levels must
rise.
Similarly, when you put moremoney in the economy, but the
amount of goods and servicesstay the same, then price levels
rise.
Now everyone in the pool has toadjust to the new water level.
People in the shallow end likesmall businesses have to raise

(02:39):
their heads or raise theirprices to stay above water.
People in a deep end.
Which are large corporationsmight barely notice the change
because their services orproducts are usually directly
adjusted.
Now, some people swim fasterthan others, which is why we see
housing prices rising at 7.1%,food prices rising 2.9% while

(03:05):
gas and energy prices areactually decreasing.
When swimmers move, they createripples.
This represents businesseschanging their price.
These ripples affect otherswimmers, i.e.
other businesses and consumers.
Everyone has to adjust to boththe higher water level and the

(03:26):
ripples, then a multitude ofripples eventually turn into
waves.
More adjustments creates morewaves.
More waves leads to moreadjustments.
This cycle continues until thepool operator either opens the
drain or stops adding water tothe pool.

(03:46):
This parallel is the same as theFederal Reserve, either taking
money out of the circulation ofthe economy or tightening their
monetary policy in order toadjust the price levels.
So what's the key point?
Just like a pool's water levelaffects everyone differently

(04:07):
based on where they're standing.
Inflation affects parts of theeconomy differently based on
their industry, positioning andability to adjust.
We'll continue this discussionand break down why inflation
should not drive your pricingdecisions and ways you can use
inflation to benefit you andyour loved ones.

Remember (04:30):
the most successful barbers aren't just great with
clippers.
They're smart with their money.
The choice is yours, but theclock is ticking.
Don't let inflation give you ahaircut you can't style your way
out of.
It's your move, boss.