Inflation – The Silent Thief of Your Savings – An Escape Plan from Economic Catastrophe

A thief in white gloves

‍You put $100 into a piggy bank. You place it on a shelf and think: “Okay, in a year I’ll buy the latest shoes or a solid, reliable backpack.”
‍
A year passes. You pull out the bill and head to the store – and what do you find?
‍
The same shoes now cost $120. But your $100 bill is still just that – $100. So what happened?

That’s inflation.
‍
It didn’t take money out of your account. It didn’t grab it from your wallet.
‍
But silently, slowly – it reduced the purchasing power of your money.

Inflation is an invisible hole in your pocket

Inflation is like an invisible tax – one that no one officially announces. You don’t get a letter saying, “Dear citizen, this year your money is worth less.”
‍
But it’s happening. Every day. Slowly.

It’s a bit like a bag of chips – used to be full, now it's half air. Same brand, same price, but you’re getting less.
‍
Or like a chocolate bar – once big and satisfying, now small and barely two bites.

Your money is losing value. Not because you have less of it, but because you can buy less with it.

Why is your salary increasing, but you’re still not saving anything?

Maybe this sounds familiar: you get a raise, you're happy…
‍
but a few months later, you're back to scraping by and there’s still nothing left in your account.
‍
That’s not bad luck – it’s inflation.

Inflation doesn’t just eat your savings; it also eats the results of your hard work. When prices rise faster than your income, you’re actually earning less – even if your paycheck looks bigger. It’s like running on a treadmill that’s tilted uphill. You can try as hard as you want, but without taking extra steps – like investing or developing new skills – you’re not moving forward.

Has inflation always existed?

Yes. Inflation is something that has been happening virtually all the time. Even in ancient Rome, in order to cover the rising costs of military campaigns and governance, the empire began minting coins with less and less silver or gold content.

It’s like changes in the weather – it’s been around since the beginning of time. Sometimes it's calm – prices rise slowly, almost imperceptibly.

Other times, it hits like a thunderstorm – everything becomes more expensive week after week.

An example?
‍
Do you remember how much bread cost 5 years ago? Or a movie ticket 10 years ago? Just ask your parents – many prices back in their youth were several times lower than they are today.

How does inflation work?

Put simply, inflation is the decline in the purchasing power of money, which leads to a general increase in prices across the economy.

But it’s not just about one item becoming more expensive – it means that everything – food, bills, services, transportation – costs more than it did before.

This doesn’t necessarily mean that the real cost of producing those things has gone up. What’s really happening is that the value of money itself is going down.

It’s like taking the same shopping basket to the store every day – and having to pay a few extra dollars each time, even though you’re buying exactly the same things.

Why does inflation occur? A short economics lesson

Inflation doesn’t appear out of nowhere – it’s the result of an increase in the money supply.

‍If more money enters the economy but there is no corresponding growth in the production of goods and services, then money begins to lose its value.

Governments and central banks constantly "print" more money and keep interest rates artificially low to stimulate the economy. These actions may have positive short-term effects, but in the long run, they always lead to the same result – a decline in the value of money, also known as inflation. As money loses value, the general price level in the economy rises.

In this way, a portion of your savings quietly finances excessive government spending, and you can afford to put less in your shopping basket than you could a year ago.

What does this mean for you?

If you keep your money only in a bank account or as cash – inflation is eating away at your savings every single day. And it does so quietly.

Example:

‍You have $10,000 in your account. Inflation is at 5%. That means that in a year, the same goods and services will cost you $10,500 on average. But you still only have $10,000.

You didn’t go bankrupt. But you’re not standing still either.

You’re moving backward.

Can you protect yourself from it?

Yes. It’s a bit like rain – you can’t stop it, but you can bring an umbrella.

That umbrella is investing – the kind that brings returns higher than inflation over the long term.

Many people start with “investments” that pay out something, but after taxes, don’t actually beat inflation – like a bank deposit. The solution is investing in stock market indexes – sets of the largest companies in a given country or region.

Why? Because these companies generate profits, grow, and their value tends to increase faster than inflation over time. They reflect the health and growth of a country’s economy.

You don’t have to be an expert to start.

You just need to understand the basic principle that successful investors already know:

Don’t hide money under the mattress. Let it work for you.

Inflation isn’t scary – if you know how to outsmart it

It’s not about panicking.

It’s about not staying passive.

Inflation is part of life in a world where governments control money – it’s as certain as the cycle of day and night, other taxes, and death. But if you learn to understand and live with it, you can protect your savings and build a future that doesn’t depend on rising store prices.

Summary – 4 things worth remembering:

• Inflation is a decline in the value of your money, which leads to rising prices.
• You don’t see it immediately, but it’s at work every day – like a silent thief.
• Keeping money in cash = guaranteed loss over time.
• Investing (e.g., in indexes) helps preserve your money’s value long-term and generate returns.

Without financial education and understanding the mechanisms around you, you’ll end up working more and more – for less and less.

Start taking action today – for example, by reading the other articles on this blog.

Investing in stock exchanges and financial markets is one of the ways to grow your money. It’s no coincidence that this path is chosen by people with significant wealth, as well as by those who have built their fortunes through well-thought-out decisions. The Freedom24 platform offers the opportunity to embark on this journey and discover how the world of investing works.

‍