I'm saving every month. Why does it feel like I'm going nowhere?

• If your bank pays 1% and prices rise 2%, the number in your account goes up while what it buys goes down.
• That's no accident: most major central banks aim for about 2% inflation a year, on purpose.
• At that rate, money that just sits there loses about a third of its buying power in 20 years. Saving still matters, but where you keep it matters just as much.

You did what you were told. You skipped a few nights out, put money aside every month, and watched the number grow. So why does it feel like you're standing still? Because the number was never the point. What counts is what that money can buy, and that has been shrinking the whole time. It's not because you did anything wrong. Prices are meant to rise a little every year, and your bank has no obligation to keep up.

Let's make it concrete

Mateo has $10,000 in a savings account that pays 1% a year, and he doesn't touch it.

Ten years later, his account shows about $11,050. So he made money, right?

In the meantime, prices rose 2% a year. Something that cost $10,000 back then now costs about $12,190. So Mateo's $11,050 buys what about $9,060 bought when he started. The number went up by about $1,050, but what it can buy went down by about $940.

Nobody took anything from his account, and the balance never went down once. That's why the loss is so easy to miss: it never shows up on a statement.

So is cash useless?

No. Money for next month's rent or for an emergency belongs exactly there. The problem is money you won't need for years, sitting still while it melts.