Tool 14 · Inflation
What your money will really be worth.
Inflation is the quiet tax on cash: the same note buys a little less every year. Enter an amount, a rate and a horizon, and see both sides — what things will cost, and how much today's money shrinks in buying power.
and what costs that today will cost $0.
Pro features. Add your pay rises and the interest your cash earns to see whether you're really keeping pace with inflation — plus a year-by-year table and exports.
Are you keeping pace?
Refine the model
Average annual increase in your income. Below inflation means you're falling behind.
Interest on money you hold. This adds a "real value" line for savings.
Year by year
Compare inflation rates
| Inflation rate | Future cost | Buying power |
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How inflation eats your money
Inflation is the gradual rise in the general level of prices — and, equivalently, the gradual fall in what each unit of your currency can buy. At a modest-sounding 3% a year, prices don't just rise 3% and stop; they compound, exactly like interest, only working against you. Over a working lifetime that quiet erosion is enormous: at 3%, prices roughly double every 24 years, which means money left sitting in cash loses half its purchasing power over that span without you ever spending a penny.
This calculator shows both faces of the same coin. The future cost figure answers "what will something that costs this today cost later?" — it grows your amount by inflation. The buying power figure answers "what will today's amount actually be worth?" — it shrinks your amount by the same rate. The chart plots the two diverging over time so you can see the gap open up. With Pro, you can layer in your own pay rises and the interest your cash earns to see whether you're genuinely keeping pace or quietly falling behind.
The practical lesson is why simply "saving money" isn't enough. Cash under the mattress, or in an account paying less than inflation, is guaranteed to lose value in real terms. To preserve — let alone grow — your wealth, your money needs to earn a return at least equal to inflation. That's the entire case for investing rather than hoarding cash, and it's why every long-term projection worth its salt is done in real (after-inflation) terms.
A worked example
€10,000 · 3% inflation · 20 years
What costs €10,000 today will cost about €18,060 in 20 years. Flip it around and today's €10,000, if left as idle cash, will buy only about €5,540 of today's goods — it has quietly lost roughly 45% of its purchasing power. The money didn't disappear; prices simply moved beyond it.
Things to keep in mind
- Cash is not "safe" over the long run. It's stable in number but shrinking in value. For money you won't touch for years, inflation is a bigger risk than market wobbles.
- Your personal inflation may differ. Official rates are an average basket; if your spending skews toward things rising faster than average — rent, energy, education — your real rate can be higher.
- Beat it with real returns. An investment returning 7% during 3% inflation grows about 4% in real terms. See how that compounds in the investment calculator and compound interest calculator.
- It shrinks debt too. Inflation quietly erodes the real value of fixed-rate debt like a mortgage — you repay tomorrow's cheaper money. It's the one place inflation can work in your favour.
- Plan retirement in today's money. A pot that sounds huge decades out may be ordinary once inflation is stripped out. Our retirement calculator works in real terms for exactly this reason.
Frequently asked questions
What inflation rate should I use?
Many central banks target around 2%, and long-run averages often sit near 2–3%. Using 3% is a sensible, slightly cautious default for long-term planning, but try a higher figure to stress-test — inflation can spike for years at a time.
What's the difference between future cost and buying power?
They're mirror images. Future cost multiplies your amount by inflation ("prices go up"). Buying power divides by it ("your money buys less"). Both describe the same erosion from opposite ends.
How do I actually beat inflation?
By earning a return above it. Cash rarely keeps up; historically, diversified investments like stocks have beaten inflation comfortably over the long run — at the cost of short-term ups and downs. See the investment calculator.
Is inflation ever good?
For borrowers with fixed-rate debt, yes — it erodes the real value of what you owe. And mild, steady inflation is generally considered healthier for an economy than deflation. It's persistent high inflation that does the damage.
Does this use compound inflation?
Yes. Each year's prices rise on top of the last, so the effect compounds — which is why long horizons look so dramatic. It's the same maths as compound interest, pointed the other way.