How inflation eats cash savings

WHAT IT IS

1. Inflation means prices rise over time

• The same dollar buys a little lessGroceries, rent, gas
• It's tracked by the Consumer Price IndexPublished by the BLS
• Your raise has to beat itOr you're losing ground

Source: U.S. Bureau of Labor Statistics.

THE MATH

2. What it does to cash

• $10,000 sitting as cash for 10 yearsAt 3% inflation a year
• Buys what about $7,441 buys todaySame dollars, less stuff
• At 3%, prices double in about 24 yearsThe rule of 72

Illustrative example: assumes 3% inflation a year. Real rates vary.

CASH STILL MATTERS

3. Don't ditch your emergency fund

• Keep cash for emergenciesSafety beats growth here
• Just don't let it sit at near-zero interestLook for a better rate
• Big extra cash may need a planBeyond savings

OPTIONS TO ASK ABOUT

4. Ways people fight inflation

• High-yield savings accountsFDIC insured at insured banks
• I bonds and TIPSTreasury securities built for inflation
• Long-term investing in retirement accountsFor money you won't need for years

Sources: FDIC, TreasuryDirect.

YOUR NEXT STEPS

5. Questions to ask

• How much do I need in my emergency fund?
• What rate is my savings earning?
• What's my plan for money I won't need for years?

Educational only, not financial advice. Talk to a fee-only fiduciary or CPA about your situation.