When most people think of inflation, their response is usually similar to when they see a vintage advertisement: reminiscing about the cheaper prices of the past (15 cents for a burger? Awesome!) while simultaneously feeling some resentment towards today’s ever-rising prices. Generally, inflation is seen as a frustrating “financial fact of life” that passively affects everyone as price levels climb and as the dollar’s purchasing power decreases over time.
The reality is that inflation is affecting your finances more aggressively than you might realize—especially when it comes to your savings. Without the proper planning in place, the effects of inflation could actually be costing you your savings.
In conclusion, the concept of inflation does a lot more harm than just making us gripe about the rising cost of goods and services—it makes it difficult for us to anticipate just how much we need to save in order to reach our financial goals. Increasing the rate of return on your savings through investing is the best way to counter the effects of inflation, and it will help ensure that the money you save today will have the purchasing power to afford what you need in the future.