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Money in the Real World

Other Factors That Change a Budget

Inflation

The overall prices of goods and services goes up every year. This is called inflation, and it will make a difference in your budget over time.

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Think about what happens when you blow up or inflate a balloon. It gets bigger, right? That’s what happens to prices on the things you need to buy.

Milk at school once cost $.05 to buy. Now it probably costs you $.50 or more. That is all because of inflation.

The good thing about inflation is that usually your income will rise with the prices. In five years, you may go from an allowance of $10 a week to an allowance of $15 a week. This gives you more money to use on the high-priced items in the stores.

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