Inflation Attacks The Tooth Fairy! | Fee-Only Financial Planners Long Island

Inflation Attacks The Tooth Fairy!

Over the school holidays, we usually have one or more of our staff’s children visiting the office. It’s really fun to have them spend the day with us and during lunch time we have some terrific conversations and find out what is “happening” in their lives.

Our most recent visitor, Anthony Cappa, Jr., dropped by minus a few of his teeth, the front ones in particular. As a child, I remember being teased that you lost your front teeth from “kissing the boys” or “kissing the girls.” Anthony insisted that was “gross” and that he lost them from eating jawbreaker candies (fortunately for Anthony, these were still his “baby” teeth). I told him that if he kept eating jawbreakers, he would need false teeth. Anthony laughed and responded by telling me a story about his grandfather’s false teeth
and how he used to chased him with them!

Well my next question was, “How much did the tooth fairy leave under your pillow?” Very innocently, Anthony replied “10 bucks.” I almost fainted, remembering that a quarter was a big deal back in the day. With the teeth he lost, he told me he’d received over $30. That got me thinking. I did a little calculating and determined that the inflation factor for the tooth fairy was 8.16%.

Of course that increase was over a LONG period of time between my visit from the tooth fairy and Anthony’s.

When we prepare your financial plan update we use the historical rate of inflation, which is 4%. So remember, when you’re figuring your expenses for your plan update, be sure to double your miscellaneous or gift expenses to safely account for that “tooth fairy” inflation.

Enjoy!

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