How inflation affects your money
Inflation is the gradual rise in prices over time. As prices go up, each unit of money buys a little less. This calculator shows two sides of the same coin: how much something priced at a set amount today will cost in the future, and how much buying power a fixed amount of cash will have lost by then.
The formula
Future cost = Amount × (1 + rate)years · Buying power = Amount ÷ (1 + rate)years
It's the same compounding math as savings growth — but working against you instead of for you.
Worked example
$10,000 at 3% inflation over 20 years:
- Something costing $10,000 today will cost about $18,061 then.
- $10,000 in cash will buy only about $5,537 worth in today's terms.
- Buying power lost: ≈ $4,463 — nearly half — without spending a cent.
The Rule of 70
A quick shortcut: divide 70 by the inflation rate to estimate the years for prices to double (and buying power to halve). At 3%, that's 70 ÷ 3 ≈ 23 years. At 2%, about 35 years; at 5%, just 14.
Why it matters for saving
Money sitting in cash slowly loses value to inflation. To at least keep pace, your savings generally need a return close to or above the inflation rate — which is why many people invest rather than hold only cash. For example, $50,000 left as cash at 2% inflation for 30 years keeps only about $27,600 of today's buying power.
Common mistakes to avoid
Assuming today's prices will hold for decades. Comparing a future salary or nest egg to today's prices without adjusting for inflation. Treating a fixed inflation rate as exact — real rates swing year to year. Holding large cash balances long-term and mistaking "no loss" for "no risk."
Frequently asked questions
What inflation rate should I use?
Long-term averages are often around 2-3% per year in many developed economies, but it varies by country and period.
How is future cost calculated?
Amount × (1 + rate)^years. Buying power is amount ÷ (1 + rate)^years.
What's the difference between future cost and buying power?
Future cost is what a thing will cost later; buying power is what your cash will be worth later. Two sides of the same coin.
What is the Rule of 70?
70 ÷ inflation rate ≈ the years for prices to double. At 3%, about 23 years.
How do I protect savings from inflation?
Aim for a return at or above inflation. Idle cash loses value, which is why many people invest.
Does this assume a constant rate?
Yes. Real inflation varies year to year, so treat the result as an estimate.
Is my data saved?
No. Everything runs in your browser; nothing is uploaded.