When students realize that the $200 they earned back in freshman year is now worth only $178, most are in disbelief. How can my uninvested money lose its value just by sitting in the bank or in my wallet? The cause of this decline in value of the U.S. Dollar is called inflation, a fancy term to describe how much more expensive everyday items become in a certain time frame. The U.S. government sets an average inflation rate target at around 2 percent. But due to the rapid printing and issuing of money during the COVID-19 pandemic, inflation rates have spiked 5.3 percent in the past year. In other terms, the United States Dollar has dropped 5.3 percent in value.

You witness the price change when eating out and when getting paid. Local restaurants are now forced to raise prices over time in order to keep the same profit margins as before. You might feel a sense of excitement in receiving a 2 percent pay raise per year. Instead of making $30,000, you are now making $30,600! Awesome! Well not exactly, inflation is eating that pay raise, and at the end of the day that $30,600 has the same value as the $30,000 the year prior. 

One way to protect yourself against inflation is to find an investment that makes 2 percent or more annually. The most risk-free investment you can make is investing in the U.S. government by way of treasury bonds (an investment into the government in which the government pays out a fixed rate until the expiration of the bond). Currently, 30-year treasury bonds are hovering around the 2 percent mark. This is perfect for the educated individual who just wants their money to hold its value. 

Another option that yields a higher return would be investing in the stock market. Providing an average rate of return of about 10 percent (invested into an S&P 500 index fund), the stock market is a great way to protect and profit off of your earnings at the same time. 

Inflation is crucial to understand. A dollar in 1970 is now only worth around 14 cents. At the rate of inflation currently, high schoolers should truly consider protecting their hard-earned money because, before you know it, the value of your money will be cut in half.