Calculate how the value of your money changes over time due to inflation.
Inflation is the rate at which the general level of prices for goods and services rises, and subsequently, purchasing power falls. When inflation occurs, every dollar you own buys a smaller percentage of a good or service.
If the inflation rate is 6%, something that costs $100 today will cost $106 next year. Over 10 or 20 years, this effect compounds, making your "saved" cash worth significantly less if it isn't invested to grow faster than the inflation rate.