Inflation quietly reduces the value of your money every year. Even if prices rise slowly, the long-term impact on your savings can be far bigger than most people expect.
In this guide, you’ll learn exactly how inflation erodes your money, see clear USD examples, and discover practical ways to protect your purchasing power.
Inflation is the gradual increase in prices over time. As prices rise, each dollar buys less than it did before.
If inflation averages 3% per year, something that costs $100 today will cost about $103 next year — even though the product itself hasn’t changed.
The real danger of inflation is lost purchasing power. Your money may stay the same numerically, but what it can buy shrinks.
Without growth, inflation silently eats away nearly half your money over two decades.
Keeping money in cash or a low-interest account is risky during inflationary periods.
This is why many people feel poorer even when their bank balance looks the same.
You can see this effect clearly using the Inflation Calculator.
What really matters is whether your money grows faster than inflation.
This is why understanding interest rates is crucial. You can explore this further in:
Compound interest allows your money to grow exponentially, which is one of the most effective ways to offset inflation.
You can experiment with different rates and timelines using the Compound Interest Calculator.
If you’re saving toward a goal, the Savings Goal Calculator can help you plan contributions that outpace inflation.
Use the free calculator to explore real scenarios and timelines.
Open Inflation Calculator →