At the heart of financial well-being is one powerful idea: ownership. Not just ownership in the technical sense — but ownership as agency, stability, and participation in the future you are helping build.
Across the country, there’s growing recognition that owning assets — a home, retirement accounts, investment portfolios, or even small slices of companies through the capital markets — is one of the most reliable ways people build long-term security. Wages alone rarely keep up with productivity or rising costs. The gap is increasingly closed through the growth of owned assets, not earned income.
But ownership doesn’t begin with wealth. It begins with understanding.
Finhabits Talks was created with that purpose: to make essential financial concepts accessible, clear, and practical. Through straightforward conversations with experts, the series helps people understand the forces that shape their money and the habits that support long-term progress. When people understand the system, they can participate in it with more confidence — and, over time, build real ownership.
One of the most important concepts to understand — because it touches every budget and every long-term plan — is inflation.
To unpack it, Finhabits CEO Carlos García sat down with Elizabeth Muirhead, CFA, portfolio strategist at Vanguard, for a simple, grounded conversation about what inflation really is and how investors can stay focused when prices rise.
Why inflation feels personal
Inflation is usually expressed as a single percentage, but no one lives it as one number. How you experience inflation depends on your daily life: rent, commuting, groceries, healthcare, childcare, and even small routines. Two people with similar incomes can feel inflation in very different ways.
This gap between “the official number” and “your lived experience” is why inflation often feels confusing. Understanding that difference makes the topic easier to approach.
The quiet erosion of purchasing power
Early in their conversation, Muirhead offers a simple, memorable way to understand inflation:
“Imagine you have a business generating a thousand dollars a month, but someone keeps sneaking money out of the cash register. That’s what inflation does to your purchasing power.”
Inflation isn’t just about rising prices. It’s the gradual decline in what each dollar can do. Even when your income stays the same, the reach of each dollar changes quietly over time. This silent erosion is why understanding inflation is essential — it helps you see the broader picture behind the day-to-day noise.
How inflation shapes behavior
When prices rise quickly, the natural response is to pause: to delay investing, reduce contributions, or wait for things to settle. It feels safer. But inflation is not predictable enough to guide timing decisions. Relying on it as a signal to “wait it out” often interrupts compounding and slows long-term progress.
As Muirhead explains:
“You can’t time inflation or the market. But you can decide to be consistent.”
Consistency is the part you control — and over time, it’s what matters most.
What actually drives inflation
Inflation can rise due to several overlapping forces:
Demand-driven inflation: When consumer demand grows faster than businesses can supply goods and services.
Cost-driven inflation: When production becomes more expensive — energy, wages, transportation, raw materials — and companies raise prices.
Expectations-driven inflation: When people expect prices to rise and adjust early, often reinforcing the cycle.
Understanding these forces won’t stop inflation, but it helps make the phenomenon easier to understand.
Inflation and investing
In high-inflation periods, holding cash can feel safer. But inflation steadily reduces its value. By contrast, diversified investment portfolios have historically had the potential to grow faster than inflation when held over long periods. This doesn’t guarantee returns, but it highlights an important truth: owning assets gives your money a chance to stay ahead of rising prices.
The challenge is emotional. When everyday life becomes more expensive, the future feels uncertain. But this is precisely when habits matter most.
What you can control
Inflation is unpredictable, but your habits are consistent — and that’s where your real influence lies. Helpful long-term behaviors include:
- setting monthly contributions you can maintain
- automating deposits so emotion doesn’t override your plan
- keeping an emergency buffer
- using tools like Emma inside the Finhabits app
- reviewing your budget with intention
When inflation creates noise, steady habits create clarity.
Explore more resources
To continue strengthening your financial habits, explore more educational content inside the Finhabits app and watch additional conversations from Finhabits Talks.
Disclaimer
This content is for educational purposes only and is not personalized financial advice. Investing involves risks, including the potential loss of principal. Past performance does not guarantee future results.
Sources
Bureau of Labor Statistics — Consumer Price Index
Federal Reserve — inflation and price stability
Vanguard Research — long-term returns vs. inflation
FINRA — Investment Products
Reuters — consumer pricing and spending trends
