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What Valentine’s Day could cost you in 2020!

Investing

What Valentine’s Day could cost you in 2020!

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After a 3-month long January  🙂 , Feb is finally here. And with Feb comes Valentine’s Day; a day that holds some sweet memories for me.

Seven years ago, I had just started dating the gorgeous lady that is now my wife. Since our relationship
had just begun, Valentine’s Day was an exciting and – I must admit – a bit stressful prospect; I really
wanted to her to feel special.

I was a student at the time and, needless to say, was a little bit strapped for cash. I didn’t have a regular
income (or any income at all) so I had to be quite creative and strategic about my plans to woo her. In
anticipation for Valentine’s Day, I deposited a certain amount of money in an interest-bearing account
every month for the three months leading up to the big day.

I remember getting a fresh cut, pulling out the pinstripe suit and booking dinner for two at a fancy
restaurant. I arrived at 7 pm sharp to pick her up (no, I didn’t have a car; I had begged my elder brother
to chauffeur us around for the day :”D). I had in my hands a bouquet of flowers, some nougat (she hates
chocolate – surprising I know) and teddy bear which she very quickly named Alice.

Now since this is Zonotho, I will try to stay focused on the financial aspect of the day.

Back in 2011, Alice the teddy cost me around R120, the roses cost R40 and that specific bar of nougat
cost R15. This means for the three months leading up to V-day, I had to deposit R72 into that savings
account to buy these three items in Feb. (accounting for interest earned in my account).

… I’ll never forget the look on her face when she saw me. She looked amazing. We had a great time, and
still reminisce about that first V-day to this day.

Fast forward to 2018: I recently took a stroll around town interested to see how much things have
changed since back then. To my surprise, I found that the same type of teddy costs R500, a bouquet
costs R130 and the nougat costs a whopping R42.99! Now, If I had the same amount of time to save up
for those gifts, I would have to almost triple what I put away! Crazy!

Assuming a similar trend*, you can expect to pay just over R750 for a teddy, R180 for flowers and R60
for a bar of nougat in 2020!

Lesson to be learnt here is that Inflation is factor you always have to consider; and not just for gifts, or
daily living, but in your investing as well.
If you invest your money without considering how inflation affects you, the chances are that you will
end up with less than what you need. Whether you are saving up for retirement, your kids fees, a
deposit on your dream home, or V-day 2019, make sure you factor in the increase in the price of your
intended purchase.

 

 

*Inflation of these prices does not have to follow a similar trend at all. Each good’s price is affected by
different factors and may increase, decrease or remain the same over time depending on these
aforementioned factors. This example is being used simply for demonstration purposes

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Benjamin is a corporate actuary, currently working at a major financial services firm. He has experience in wealth and investment products. Benjamin is very passionate about teaching and empowering minds.

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