That proud feeling you get when you’ve
managed to finally save some money. Feels great doesn’t it. Especially if your bank is paying interest on top. These savings are getting you closer to whatever you’re dreaming of, a bucket-list holiday flashy car even a new home or are they say it’s that bucket-list holiday you’re saving for and you need two thousand
pounds for it at the moment you have a thousand pounds saved and it’s in a decent account so it can earn interest of 1% a year but there’s something else affecting those savings INFLATION Inflation is basically the rate at which prices are rising every year and so in the same year the £2000 pound holiday will have gone up by 2.5% the difference in these percentages is called the ‘real interest rate’ it’s your savings rate, minus inflation and at the moment it’s very likely to be negative meaning your savings are falling more and more behind and that holiday getting further and further away Now imagine instead of a holiday you’re saving for your dream car or even your dream home What will you end up with in the future?