This calculator uses the annual inflation rate to calculate the future value of your money. For example, you can learn how much $1000 will be worth in 5 years.
How Inflation Affects Your Money
Inflation is the rate at which the general level of prices for goods and services is rising, consequently decreasing purchasing power over time. Understanding how inflation affects your money is crucial for financial planning.
Calculation Method
The future value of money under inflation is calculated using the compound interest formula:
FV = PV × (1 + r)^n
For example, $1000 with 5% annual inflation over 3 years would be: $1000 × (1 + 0.05)³ = $1157.63
This calculation helps you understand how inflation erodes purchasing power over time. The longer the time period and the higher the inflation rate, the more significant the impact on your money's value.