If your grocery cart has the same stuff in it as two years ago but the total keeps climbing, you're not crazy and you're not bad at budgeting. There's a name for what's happening, and tonight I'll explain it like a neighbor would.
By the end of this one you'll know what inflation is, why prices creep up over time, and what it quietly does to cash that just sits still.
The lesson
Inflation is the word for prices rising over time, which is the same as saying each dollar buys a little less than it used to. Think about your weekly grocery run. Same cart, same milk, same bread, same peanut butter for the kids, but the number at the register drifts up year after year. A big part of why is that when more dollars are floating around chasing the same amount of stuff, sellers can ask for more of them. A little inflation is normal, most years in America it has run somewhere around 2 or 3 percent, some years a lot more. The sneaky part is what it does to money hiding in a drawer, the bill still says 100 but the cart it can fill keeps shrinking. Nobody steals a dime out of that drawer, the dollars just get a little weaker while they sit.
Walk the $100
Same lesson, told by a hundred dollar bill. Tap to walk it one step at a time.
In this example, 100 dollars goes under the mattress and inflation runs 3 percent for the year.
Next year it takes about 103 dollars to buy the cart that 100 used to buy, so that bill now fills about 97 dollars worth of cart.
Let it sit ten years at that same example rate and it buys about what 74 dollars buys today.
The paper never changed, the world around it did.
At your kitchen table
While digging the winter coats out of the closet, you find an envelope with 200 dollars you hid two years ago and completely forgot. Your first feeling is jackpot, and your second feeling is wondering where it should live now.
Pick your move. Then peek at the other roads if you're curious.
Tuck it right back in hiding. The envelope stays safe from every hacker and every bank hiccup, and there's real comfort in that. But if prices keep climbing around 3 percent a year like in this example, that 200 buys only about 188 dollars worth of groceries two years from now. Nobody touched it, and it still got smaller.
Move it into our savings account. At a 4 percent example rate it collects about 8 dollars a year in rent from the bank, a hair ahead of 3 percent example inflation. The envelope magic is gone, but for the first time the number grows instead of quietly shrinking.
Stock the pantry at today's prices. Here's the one beginners never see coming: buying shelf-stable food the family eats anyway locks in today's prices, and inflation can't claw that back. The catch is the money is fully spent, so the week the car acts up, the pantry can't pay the mechanic.
Inflation means sitting still is not the same as staying safe, because each dollar quietly buys a little less every year.
Quiz yourself
🐓 Got a question about this one? Ask it on the live at 7 AM or 7 PM Mountain, TikTok @247candles. Steven answers class questions by name.