George’s daughter laughed at him when he told her he received two dollars every day from his late grandmother as his daily allowance. She asked him how in the world he survived with a daily allowance of two dollars, when the cost of buying a small bottle of coke is 12 cents.
Matt told her that when he was a grade one student in 1978, two dollars could buy you a small bottle of coke. He also told her that the cost of loading up on gasoline was twenty bucks. I watched her puzzled look and realized history repeats itself. He recall himself reacting in the very same manner in 1978 when his maternal grandfather narrated how cheap prices were back in the 1940s and ’50s. So now, he has finally reached full circle. As the years passed, he realized that the money you are holding now is definitely worth more than what it will be at any given time in the future.
In 1980, when Matt’s mom and he went to the grocery, he got a dozen boxes of tissue paper, each worth $7.85 then. As the years passed, he took note of the changes in price. The last time he looked was in 1998. The box of tissue he tossed inside the grocery cart as a kid was now at $1 each! His daughter did the very same thing he did and she got several tissue boxes and threw them without much thought into their racks. It was a valuable learning experience to see things from a historical point of view and use the past as a guide to future trends. He looked into his wallet and thought how much $25 could have purchased in 1980. A lot, definitely! Now, he was worried if the $25 he had was sufficient to cover a week’s groceries. It was embarrassing for him to return some items at the last minute as the cashier computed their bill. He ended up returning almost half of everything they got. So much for the value of $25!
Investing to beat inflation is the only way to make our money grow. The stock market, treasury bills and notes, commercial/debt papers, mutual funds and time deposit accounts offer higher rates of return. Minimizing unnecessary expenses is also another proactive way of improving one’s finances. Having a systematic saving schedule is equally indispensable. The earlier one starts saving, the more one accumulates. We have to think long-term and avoid being greedy. Greed has been the downfall of many and is a sin that brings its own punishment. Better to have your money grow slowly than to be promised with outrageous returns, only to lose your capital completely!
People have a false sense of security with the amount of money they have in the bank. Some young professionals who manage to accumulate their first million dollars proudly pro claim themselves as millionaires. The more intelligent ones are fully aware that the million dollars in 2004 is probably worth only a few thousands in the 1950s. Also, one million dollars by 2020 will probably be worth only fifty thousand dollars in terms of 2004 purchasing power. This is an economic reality that investors should always bear in mind. Wealth is highly relative. The term “Millionaire” and “Being well-off” may not always be accurate from a historical point of view.
Add A Comment