Inflation Is Making You Poorer — Here’s What You Can Do About It

As prices reach once-in-a-generation highs, inflation has many Americans understandably worried about their pocketbooks.

What is inflation? Simply put, it’s the erosion of a currency’s purchasing power. When the inflation rate is 2%, for example, every dollar becomes 2% less valuable per year. Although 2% may not seem significant, someone earning $50,000 per year would see their effective income drop by $1,000 under such conditions — a substantial loss in wealth.