The Inflation Scenario - [Finance For Engineers]
Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.
The importance of inflation in financial planning cannot be ignored. If you have a goal that you want to achieve in the foreseeable future then increase the cost of that goal by the inflation factor you think is near to perfect and a safety margin. Inflation is a daunting factor and it will make you run to maintain the same standard you are enjoying now. Inflation applies to almost everything in your daily life, even necessities, so increase the cost of necessities too. How much should be the inflation factor? It can be the of the last year, it can be the average of last few years or else you could find the rate of rise in inflation of the last year or the average rate of rise in inflation in the past few years and add it to the current inflation factor suitably. It will depend on your method the hard work you put in to understand the finer details. This exercise will help a lot as at the end if you have achieved your goal you will be satisfied, but if you have surpassed your desired level of expectations and you are left with plenty of money after fulfilling your goal, you will be happy because now you can think of doing a thousand and one things.
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