The value of our money is determined by factors such as interest rates, exchange rates, and inflation. Money can easily lose value if the economy is performing poorly and international trade is taking place with countries that have stronger currencies than ours.

With all this in mind, we shall think about just how the value of money is affected by what is going on in the world.

World Economies

It is what is going on with the global economy which impacts interest rates and inflation, whilst the currency exchange rate becomes the factor that indicates the economic health of a country.

A currency that is valued higher will mean that a country’s imports are less expensive whilst its exports are more expensive. This means that traders in the country with the higher value exchange rate benefit financially, but only if they can sell their product which becomes more expensive. Also, these rates affect investor confidence when it comes to investing in a certain country or currency. Nobody wants to see their investment become worth less.

A strong currency is also beneficial for people who like or need to travel abroad. Whilst a weak currency is good for jobs, it is not good for those who travel internationally or use imported products.

Britain and the US invented “protectionism”. In the late eighteenth and early nineteenth century, Britain had the most protected economy in the whole of the capitalist world. The protection would promote British manufacturers to allow them to compete with more superior European companies. The US would go further and develop a theory known as the “infant industry argument”, which would protect and nurture young industries until they were in a position to compete on the world stage. The man to thank for that was Alexander Hamilton, the first Treasury Secretary of the US, who would subsequently appear on the ten-dollar bill.

Interest Rates

The Central Bank will react to predicted rises in inflation and raise interest rates. It is higher interest rates that will be responsible for moderating the growth of an economy. In this sense, they are artificial but still something everyone has to deal with. The effect of a higher interest rate is that it will result in a reduction in inflationary pressures and cause the exchange rate to rise.

The effect of rising interest rates on the economy is concerning, as it has doubled in less than a year. It is also considered to be in a continuous battle with inflation. The only way that a saver can hope to earn a decent profit on their investments or deposits is when their interest rate is above inflation. However, as someone trying to afford a mortgage, you will want interest rates to be lower so that the cost of borrowing is less. This is quite a balance to maintain and is certain to benefit some and create financial hardship for others.

Exchange Rates

Exchange rates are determined by the current account on the balance of payments and so are economy influenced. Other factors that determine them include interest rates, investor confidence in the markets, and an economy’s growth. For example, if any economy was worried about the future of its economy, it would tend to sell its currency, which would then lead to a fall in its value.

So, you can see how closely linked the state of the economy, interest rates, exchange rates, inflation rates, and the level of employment can be. It is not an easy task balancing all these so that an economy can prosper and everyone is kept as financially well off as possible.

The companies that are set up in certain countries will only be encouraged to stay in the longer term if they can trade at profitable rates with other countries. Whether or not they do will impact jobs. The confidence to invest will affect where the money is going and who is benefitting from that money. Interest rates affect the saving and lending of money in terms of returns on investments and the affordability to take out a loan or mortgage. Beneficial exchange rates are important to those involved in international trade or travel. All these factors working together makes for an economy a government can be proud of and something which will affect how electable they are in the future.

Professionals tend to get paid more, but they also get stuck in a cycle of self-sabotage, making it almost impossible to be as successful as they wish. In our recent post “Treating the ‘Why Me?’ Problem”, I talked about how to ask for a raise, and today I want to talk about some different ways to deal with other kinds of self-sabotage. Ask for a pay rise, and you’ll be told you’re greedy, or too demanding, or you’ve been around too long.  But is it such a bad thing to ask for a pay rise? If you’re doing your job well, and if you’re behind your team, who’s to say you don’t deserve one?  Just because you haven’t asked doesn’t mean you don’t deserve one.  That’s the crux of the problem, and that’s the problem many find themselves in.

How much should you ask for in salary? Should you start by asking for a pay rise, and if so, when? When you ask for a pay rise, you have to be prepared to negotiate an acceptable amount, but is it possible to ask for more without getting a negative response? Is it wise to ask for a pay rise at the same time as asking for a pay review, or should you wait until after that has taken place?

Know the worth of your work

Imagine you’re working hard for your boss all week long, and you finally get a chance to ask for a pay rise. How do you know if you’re even worth what you earn in your job? The challenge is definitely not an easy one. Do you need to have a lot of experience to earn the promotion? Are the other employees in your department as productive as you? If so, are they paid more? Who decides what prices you, or your colleagues, should be paid?

Be considerate about your timing

Depending on your industry, the deadline for submitting your pay details may be up to several months before the official start of a pay period. If you’re an hourly worker, you could be waiting until the end of a pay period to ask your employer for a better wage. But if you’re a salaried worker, some employers may ask for a salary increase during the same period. The subject of a pay raise is a tricky one, especially if you’re asking for it. Not everyone is in a position to ask for a raise, so you may need to be creative. So, how can you beat the system? The most useful approach is to ask for a raise at the right time. If you ask for a raise too early in your career, your boss may not be willing to give you one. If you wait too long, you may have become a liability to the company and may only receive a much lower salary.

Do some investigations in your company’s salary structure

By now, most people have probably heard of the term ‘glass cliff.’ More commonly known as the ‘women’s salary. The term was coined to describe the phenomenon where female executives are more likely to be promoted to a position of leadership when the economy is struggling, and their company is facing hardship than their male counterparts, regardless of actual skills and qualifications. When it comes to negotiating pay raises, the advice you will get is ‘you ask, you negotiate.’ This is misleading. Most people don’t ask for more money. They should, but they don’t. Ask for what you deserve, and be prepared to negotiate.

Do you want to ask for a raise but are afraid you’ll be turned down? You’re not alone, according to a survey by Salary.com. 56% of us will ask for a pay rise in the next year to get more money in the next year, but only 39% are satisfied with their salaries. Another study by PayScale found that more than a quarter of us feel pressured to ask for a raise, but only 2% will ask for more money. Many people are unemployed or in positions that are underemployed. For some people, this means a full-time job that pays well, but for many others, it means that they are working just enough to get by, but they’re not working enough to live a decent lifestyle. For the underemployed, the path to earning more money can be tricky.