I have to change my target!!

RM1 that we have now is not the same as RM1 next year. Wonder why?

Just imagine, when I was in my primary school years back, my father gave me 30 cents as my pocket money. I also bring along a bottle of water to school. With only 30 cents, I can buy a plate of fried mee, or fried mee-hoon or nasi lemak. It is enough for my whole day at school.

But today, my friends give their children at least RM1 as their pocket money. Children nowadays also don’t like to bring along bottle of water to school. Not cool. They cannot buy anything with only 30 cents.

This is how the value of money has depreciated, getting smaller and smaller as time goes by. We call this kind of thing, inflation.

Based on statistical data, Malaysia’s inflation rate in the last 10 years are as follow (see table):

Year	Inflation rate (consumer prices) (%)
2000	2.8
2001	1.7
2002	1.5
2003	1.9
2004	1.1
2005	1.3
2006	3
2007	3.8
2008	2
2009	5.4

In general, inflation in Malaysia is around 2.41% every year. Hmm.. seems like I have to set my target again. It cannot be RM 1,000,000.00 anymore because this value will be getting smaller compared to today. To get the same value as today’s RM 1,000,000.00, I have to get more than that. 

This is how I calculate:

RM 1,000,000.00 x 103% = RM 1,030,000.00 (first year)

RM 1, 030,000.00 x 103% = RM 1,060,900.00 (2^nd year)

…

RM 1,304,773.18 x 103% = RM 1,343,916.38 (10^th year).

Woww, + another RM 343,916.38 to my target. Sigh..