Remember when your go-to iced latte cost less than it does now? That's inflation: the slow, steady rise in the price of everyday things. When prices go up, every peso, baht or dollar you hold buys a little less than it did last year.
Inflation isn't a villain on its own. A little of it is normal in a growing economy. The problem is when your money doesn't grow as fast as prices do.
What it does to your money
Say prices rise 4% a year. In 10 years, the $10,000 sitting in your current account would only buy about $6,750 worth of today's groceries, rent and flights. You didn't spend a cent, and you still lost a third of its power.
A handy shortcut is the Rule of 72: divide 72 by the inflation rate to see how many years it takes for prices to double. At 4%, that's 18 years. At 6%, just 12.
Why it matters for your life
- Your salary: a 3% raise in a 5% inflation year is really a pay cut. Know the number before your next review.
- Your savings: cash in an account earning 0.5% is losing value every year. A high-yield account or long-term investments can help you keep pace.
- Your debt: fixed-rate debt gets slightly easier to repay as wages rise. Variable-rate debt can get more expensive when central banks raise rates to fight inflation.
- Your goals: a house deposit, a wedding or school fees will cost more in five years than they do today. Plan with tomorrow's prices, not today's.
What you can do this week
- Check what your savings account actually pays and compare it with the latest inflation rate.
- Review your Earn & Burn: which costs have crept up without you noticing?
- Ask Bixie AI, your money assistant, to help you work out how much your goals will really cost in five years.
Inflation is quiet, but you don't have to be. Know your worth, and keep it growing faster than prices.
