What Is Inflation?

May 12

Inflation might sound like an economic buzzword you can ignore—but if you’ve ever noticed your grocery bill creeping up or your rent going through the roof, you’ve already felt its impact.

Here’s what inflation really means, how it works, and why understanding it matters more than ever.

🔍 What Is Inflation?

At its core, inflation is the rise in prices over time. That means the same dollar buys you less than it used to.

In other words:

$100 in 1990 ≠ $100 in 2025
As prices increase, your purchasing power decreases

📈 Why Does Inflation Happen?

Inflation can be caused by a few main forces:

1. Demand-Pull Inflation
This happens when there’s more demand for goods than supply. Think of it like a bidding war—prices rise because people are willing to pay more.

2. Cost-Push Inflation
When it costs more to produce goods (like fuel, materials, or wages), those costs get passed on to consumers.

3. Monetary Expansion
When governments print more money or keep interest rates low for too long, the money supply increases—causing inflation.

🛒 How Inflation Affects You

Inflation shows up in everyday life—whether you notice it or not.

Groceries cost more than they did last year
Your rent goes up even though nothing changed
Savings lose value if interest rates don’t keep up

What used to be affordable now feels like a stretch. It’s not your imagination. It’s inflation.

🧠 Why It Matters (Especially If You're Budgeting)

If you don’t factor inflation into your financial system, your money plan becomes outdated.

Budget categories that worked 12 months ago might need adjusting
Emergency funds should grow over time—not stay fixed
Investing becomes more important, not less

Inflation erodes idle cash. But it also pushes you to build smarter systems.

✅ Key Takeaway

You don’t need to be an economist to understand inflation—you just need to see it for what it is: a silent force that affects every dollar you earn, spend, and save.

The good news? Once you’re aware of it, you can build your system to account for it—so it doesn’t catch you off guard.

Ready to take control of your money in an inflation-ridden world?
→ Start your 30-day reset and learn to budget with clarity.

Jonathan Burks