Buying Power Calculator
See how inflation erodes the buying power of your money over time. Enter an amount, the average annual inflation rate, and the number of years to find out what that sum will really be worth in today's terms.
Formula
Future Buying Power = Amount ÷ (1 + inflation rate)^years
- Inflation steadily reduces what each unit of money can buy.
- Future buying power = amount ÷ (1 + inflation rate)ⁿ, expressed in today's prices.
- The difference between the original amount and its future buying power is the purchasing power lost.
- A higher inflation rate or a longer time horizon erodes value faster.
- This shows the real (inflation-adjusted) value, not the nominal cash amount, which stays the same unless invested.
10,000 at 5% inflation over 10 years
Inputs
- Amount Today: 10000
- Annual Inflation Rate (%): 5 %
- Number of Years: 10
10,000 ÷ (1.05)¹⁰ ≈ 6,139. After a decade of 5% inflation, today's 10,000 buys only about 6,139 worth of goods — a 39% loss in purchasing power.
Frequently asked questions
What is buying power?
Buying power (or purchasing power) is how much you can actually buy with a sum of money. Inflation reduces it over time.
How does inflation affect my savings?
If your savings earn less than the inflation rate, their real value shrinks even though the cash amount is unchanged.
Is the cash amount actually smaller?
No. The nominal amount stays the same; what changes is what it can buy. This calculator shows that real value.
What inflation rate should I use?
Use your country's long-run average, often around 2–3%, or a higher figure if you expect elevated inflation.
How can I protect my buying power?
Invest in assets that tend to outpace inflation, such as stocks, index funds, or inflation-linked bonds.