Why You Shouldn't Just Skip Inflation.

Inflation is something that is been in our lives a long time ago but still, we don't care but we should. Prices of houses, services, goods and many more are only going up every year. Approximately inflation increases every year by about 6.2%! Like this, the money that we have saved in our bank account loses value over time. Now you thinking 'But banks give an annual return of 0.01% interest', yes well that's right but in front of 6.2% annual decrease of your money value, it isn't really a lot. But how exactly does inflation works and what can we do?

Inflation Prediction

3% may not really be a lot but today since the prices going up and minimum wages remain the same then yeah it is a lot. But let's take a closer look. $1,000 in 2011 is equivalent in purchasing power to about $1,229.62 today, an increase of $229.62 over 10 years. The dollar had an average inflation rate of 2.09% per year between 2011 and today, producing a cumulative price increase of 22.96%.
The inflation rate in 2011 was 3.16%. The current year-over-year inflation rate (2020 to 2021) is now 6.22%. If this number holds, $1,000 today will be equivalent in buying power to $1,062.22 next year. This means that today's prices are 1.23 times higher than average prices since 2011, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 81.33% of what it could buy back then. What do we keep from this? That the value of money may be more but the buying power is much less. Let's see what will happen in 2030 with this $1,000 that we have today.

 $1,000 in 2021 is equivalent in purchasing power to about $1,304.77 in 2030, an increase of $304.77 over 9 years. The dollar had an average inflation rate of 3.00% per year between 2021 and 2030, producing a cumulative price increase of 30.48%. The buying power of $1,000 in 2021 is predicted to be equivalent to $1,304.77 in 2030. When $1,000 is equivalent to $1,304.77 overtime, that means that the "real value" of a single U.S. dollar decreases over time. In other words, a dollar will pay for fewer items at the store. This shows how important is that we invest our money and not just lay them in the banks.

What Can You Do About This

While most of us have our savings in the bank and that's what we normally should do, banks are actually stealing our money. Do you know what happens if your country or bank falls into crisis? They will take your money! In a country crisis situation when you want to request all your money to withdraw them they won't let you. 'But it's my money right?', yes they are but the banks don't think so. Take an example of what happened in 2008. We all know in 2008 was a crash on the stock market and the economy fell in the USA and not only. Greece has had and still have problems with their economy and that's why they are in the poverty zone here and a couple of years. I don't say that we should not have money in our savings account because you need them to buy a house, buy a car or do a big investment. What we are saying here is that inflation has taken all over the world and we lose our money if we just let them lay in the bank. What we should do is INVEST! Invest in real estate or on the stock market or a business or even at cryptocurrencies since they are the future of the world! Make money work for you, make money work for money! Invest your hard work money into something that potentially and long term can bring money back or even find a side hustle. The safest thing for you to do is put some money into ROTH IRA since they have an annual return of 10%! It is almost a life hack that the government wants to stop because it is so powerful. 

RESUME

At the end of the day, it is your money and you can do whatever you want to them. But people need to wake up and escape from suffering years after years. If you are good at something do it, if you have a bright business idea make it happen you never know. But what you know with the current inflation rates in 10 years all your hard-working money will decrease in value and leave you with almost nothing. Do your research invest a small amount of money in what you think is best and make your money work for you! In case you want to start a side hustle check our blog with the 6 best side hustle you can start today! 😇


Comment what is your personal opinion down in the comments!

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