How inflation eats your savings
Cash left sitting still loses value quietly — not on your statement, but in what it can buy. Enter how much you’ve saved, a yearly inflation rate, and how many years to see what it’s really worth. No formulas, no finance background needed.
If prices rise 3% a year, the $10,000 you keep as cash will buy only what $7,441 buys today after 10 years — inflation quietly eats −25.6% of its value.
Drag the sliders — or type a number. Assumes the cash earns no interest.
Why this happens: inflation is the slow rise in prices, so the same money buys a little less each year. Cash sitting idle doesn’t shrink on your statement — but what it can buy does. Beating inflation is the whole reason to invest. See what growth can do
Inflation is why growth matters. See what a steady yearly return does with the CAGR calculator, or how a small edge compounds over decades with the compound-interest calculator.
All guidesCommon questions
- How does inflation reduce the value of savings?
- Inflation is the steady rise in prices over time, so the same amount of money buys a little less each year. Cash sitting in an account keeps the same number on your statement, but its purchasing power — what it can actually buy — slowly shrinks.
- How do I calculate the real value of my savings?
- Divide your savings by (1 + the inflation rate) raised to the number of years. For example, $10,000 at 3% inflation over 10 years is worth about $7,441 in today's money — roughly a 26% loss of buying power. The calculator above does this for you.
- What inflation rate should I use?
- Many developed economies target around 2% a year, and the long-run average has often been in the 2–3% range, though it can spike much higher for periods. Try a few rates to see how sensitive your savings are — even 3% compounds into a large gap over a decade or two.
- How do I protect my savings from inflation?
- The core idea is to earn a return that beats inflation, so your money grows faster than prices rise. Historically, a diversified basket of productive assets like stocks has outpaced inflation over the long run, while idle cash has not. That is the whole reason to invest rather than hold cash.