Inflation
Inflation means that prices go up over time. So the money you have today will buy less stuff in the future.
Example: Let's say a chocolate bar costs $1 today. If there's inflation, next year that same chocolate bar might cost $1.10.
That means your dollar lost some value — it can't buy as much anymore.
Why does this happen?
There are a few common reasons:
Is inflation good or bad?
A little inflation is normal and can be okay — it means the economy is growing.
Too much inflation is bad — it makes life more expensive, especially if wages don't go up too.
Example: You invest $1,000 in something that grows 8% a year. If inflation is 5%, you're still gaining 3% in real value.
So, your money isn't just sitting there — it's working for you and staying ahead of inflation.