Inflation impact
What today's money buys in years to come, what it takes then to match today — and what a savings rate really earns after prices rise.
At 6.00% a year, prices are 1.79× today's in 10 years. ر.ق 100,000 kept as cash buys what ر.ق 55,839.48 buys now — ر.ق 44,160.52 of it simply evaporates.
At 8.00% the balance rises to ر.ق 215,892.50; in today's money that is ر.ق 120,553.24. The real gain is 1.89% a year — not 8.00%. That is the number to judge a savings rate by.
This is why a goal five years away must be planned at its future cost, and why money meant for later should earn more than prices rise.
| Year | Cash buys | Needed to match today | Savings, in today's money |
|---|---|---|---|
| 1 | 94,339.62 | 106,000 | 101,886.79 |
| 2 | 88,999.64 | 112,360 | 103,809.18 |
| 3 | 83,961.93 | 119,101.60 | 105,767.85 |
| 4 | 79,209.37 | 126,247.70 | 107,763.47 |
| 5 | 74,725.82 | 133,822.56 | 109,796.74 |
| 6 | 70,496.05 | 141,851.91 | 111,868.38 |
| 7 | 66,505.71 | 150,363.03 | 113,979.10 |
| 8 | 62,741.24 | 159,384.81 | 116,129.65 |
| 9 | 59,189.85 | 168,947.90 | 118,320.78 |
| 10 | 55,839.48 | 179,084.77 | 120,553.24 |
- Judge every savings rate against inflation, not against zero. A rate below inflation is a slow loss dressed as a gain.
- Plan any goal more than a few years away at its future cost — the goal calculator takes the future figure.
- Inflation runs at exactly 6.00% every year — it does not; some years are far higher.
- General prices, not any one thing: school fees, rent and medicine often rise faster than the average.
- The savings rate is constant and interest is compounded yearly; no tax on interest.
A worked example
The form starts with these figures (in QAR) so you can see how it works before typing your own. They are made up — nobody's real numbers appear here.
Questions people ask
What inflation rate should I use?
Nepal has run around 5–8% in recent years; the Gulf lower. Use a figure you believe, then try two points higher — the things a family actually buys often rise faster than the average.
My savings earn 8%. Isn't that good?
Against 6% inflation it is under 2% a year in real terms. Against 10% it is a loss. The balance rising is not the same as the money growing — this page shows both.
What is "real return"?
The interest rate after inflation is taken out: (1 + rate) ÷ (1 + inflation) − 1. It is the only return that tells you whether you are getting richer.
Why plan goals at the future cost?
Because a wedding or a college year five years away will cost more than it does today. Saving for today's price arrives short. The goal calculator takes the future figure.
Do you keep what I type here?
No. The figures are used to work out the answer and are not stored, and never appear in the page address.
These are estimates. The figures depend entirely on the numbers you enter and on assumptions that are listed on every result. They are not financial advice, and a bank, employer or authority may use different rules. Check anything important with them before you decide.
We do not keep your figures. Salary, debt and savings you type here are used to work out the answer and are not stored, and never appear in the page address. The only thing remembered is your country and language choice (a small cookie), so the currency can be suggested next time — never a figure you typed. Anonymous counters record that a calculation happened, not what it was.