A couple of weeks ago, I reached for a gallon of milk and nearly fell over. It wasn’t that the milk was heavy or the floor was slippery. No, it was the price tag that caught my eye. The gallon of milk was $4.50. I realize that by choosing to live in northern California, I’m going to pay more than much of the nation. However, I was not prepared for the $4.50 price tag. It’s not just the cost of milk that has gone up, but the cost of food in general. It’s not just food, but it’s gasoline as well. If that’s not enough, I’m looking forward to a future with a broken health care system (I have no confidence it will be fixed by the time I’m ready to start depending on it… in 30 years).

I can look at all these things and cry, or I can do something about it. What can I do? I can invest in the companies that make money off of me. When gas prices go up oil companies make more money and their stock goes up. By buying stock in those oil companies, I hedge my oil prices. Jeremy from Generation X Finance wrote a great article about hedging oil.

Last year I became concerned with the rising costs of health care. I decided to invest in Vanguard’s Health Care ETF (VHT). I haven’t invested enough to offset all my future health care costs. It is impossible to totally offset future health care costs as I don’t know what potentially expensive care I might need.

Lastly there’s the cost of that milk. It turns out that it’s pretty difficult to invest in specific foods. However, it doesn’t mean I can’t hedge the cost of rising food prices. One way to do this is to buy PowerShares Agriculture index. It invests in contracts for sugar, soybeans, corn, and wheat. Nicholas Vardy from Seeking Alpha makes a great case that demand for food will rise while supply is being reduced. His conclusion might have been premature as it’s performed well recently.

There are more costs that are rising out of control. If I had children, I would like to buy an ETF or mutual fund that invests in colleges. Unfortunately, such a thing doesn’t exist. If you could hedge the rising cost of any one thing in your life, what would it be?

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Lazy Man has been a lender at Prosper since February 2006. His lending has been written up in the Globe and Mail, Canada’s largest national newspaper. He is the author of the personal finance blog, Lazy Man and Money. He enjoys watching Boston sports while sipping diet cola.