No matter how strategically you spend, or where you invest your money, your wallet will not be immune from this one financial phenomenon: inflation. Before you start crying over lost money, however, take a moment to explore the four major elements of inflation everyone should know:
- Inflation in the Big Picture: Generally, inflation refers to the fact that goods and services tend to rise in cost over time. While this might not seem desirable, inflation indicates that goods in a market are arguably becoming more valuable. The opposite of inflation would be deflation, meaning what we have to sell has become less valuable.
- What It Means for Your Money: With inflation comes a decrease in purchasing power. On average, a product becomes 3% more valuable, or expensive, the following year. This means that your $20 might not buy you as much from one decade to the next.
- How It Affects Your Planning: Inflation is an unavoidable element of the financial markets. If we want to do our best to plan for our financial futures; we need to take inflation into account when calculating for our major goals, like retirement and home ownership. The cost of living will most likely go up. So this means, tough as it may seem, so should our savings.
- Inflation and Your Daily Routine: Inflation is something that takes years to feel the effects of, so you don’t need to worry about it today, right? Unfortunately, no. If you want to reach financial goals quickly and comfortably, you’ll want to keep yourself dedicated to daily savings wherever possible. Otherwise, you risk a moment where you wonder why your savings fund doesn’t feel as secure as you thought it should have.
To learn about more vital financial concepts, and the roles they play in your life, visit the Syncis blog at https://www.syncis.com/blog/.