Inflation Will Hit You, Are You Prepared?

Working all day long and earning money to make sure that you are going on the right track to achieve your financial goals and responsibilities on time.

Your Plans, Your Goals, Your Financial Responsibilities, whatever efforts you put in to achieve them, all these have a single and most ignored enemy – Inflation!

Inflation as per Wikipedia is defined as,

In economics, inflation or price inflation is a general rise in price level relative to available goods resulting in a substantial and continuing drop in purchasing power in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.

In simple words, With passing time you are losing the real value of your money. Basic household expenses of an average family in 2005 were around Rs.10,000 which now have increased to Rs.25,000 this is inflation!

Similarly, the goals for which you are planning today, say your child’s education which today costs around Rs.10 Lakhs the same education after 15 years would cost you around Rs.32 Lakhs.

So, with inflation, you have to make sure that you are targeting Rs.32 Lakhs in 15 years and not Rs.10 Lakh. Because whatever costs we are incurring today they will rise in the coming years.

Let’s understand and deep dive into the Future Value of Your Goals.

Future Value of Your Goals

Let’s see a goal of Rs.1 Lakhs will turn into what amount in the coming years at different rates of inflation.

Every 1,00,000 required today will become

After Years	With Low Inflation (6%)	With Moderate Inflation (8%)	With High Inflation (10%)
2	₹112,360	₹116,640	₹121,000
3	₹119,102	₹125,971	₹133,100
4	₹126,248	₹136,049	₹146,410
5	₹133,823	₹146,933	₹161,051
6	₹141,852	₹158,687	₹177,156
7	₹150,363	₹171,382	₹194,872
8	₹159,385	₹185,093	₹214,359
9	₹168,948	₹199,900	₹235,795
10	₹179,085	₹215,892	₹259,374
11	₹189,830	₹233,164	₹285,312
12	₹201,220	₹251,817	₹313,843
13	₹213,293	₹271,962	₹345,227
14	₹226,090	₹293,719	₹379,750
15	₹239,656	₹317,217	₹417,725
16	₹254,035	₹342,594	₹459,497
17	₹269,277	₹370,002	₹505,447
18	₹285,434	₹399,602	₹555,992
19	₹302,560	₹431,570	₹611,591
20	₹320,714	₹466,096	₹672,750
21	₹339,956	₹503,383	₹740,025
22	₹360,354	₹543,654	₹814,027
23	₹381,975	₹587,146	₹895,430
24	₹404,893	₹634,118	₹984,973
25	₹429,187	₹684,848	₹1,083,471
26	₹454,938	₹739,635	₹1,191,818
27	₹482,235	₹798,806	₹1,310,999
28	₹511,169	₹862,711	₹1,442,099
29	₹541,839	₹931,727	₹1,586,309
30	₹574,349	₹1,006,266	₹1,744,940
31	₹608,810	₹1,086,767	₹1,919,434
32	₹645,339	₹1,173,708	₹2,111,378
33	₹684,059	₹1,267,605	₹2,322,515
34	₹725,103	₹1,369,013	₹2,554,767
35	₹768,609	₹1,478,534	₹2,810,244

Now, based on your current requirement you can know the future value of your goals from the above table, and then you have to plan your financial goals accordingly.

You have to be prepared for the future value of your goals as Inflation will definitely hit you. So, are you planning accordingly, and most important – Are You Prepared?

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