InfIation Calculator: How quickly will inflation double your monthly expenses?

We all know that inflation can eat away the value of your money and make everything more expensive. Right now, India is witnessing high inflation, and the Reserve Bank of India (RBI) is working to get inflation numbers down because it’s a big concern for everyone.Should inflation remain elevated, your existing expenses may nearly double. Furthermore, if inflation were to increase slightly, those costs could escalate even further. This situation is indeed quite revealing, isn’t it?

If you’re not paying attention to inflation while investing, it could seriously impact your savings, cutting the value in half. That’s why it’s so important to consider inflation when you’re planning your investments. Let’s understand this more in detail and with an example.

How Inflation Affects You

To understand how inflation affects your finances, it’s essential to understand the math. Inflation measures the rate at which the general level of prices for goods and services rises eroding purchasing power. The formula to calculate future costs considering inflation is:

Future Value = Present Value × (1+Inflation Rate) Years

Assuming a long-term inflation rate of 6%, your current expenses amounting to Rs 1 lakh represent the present value. With the inflation rate set at 6% (0.06) and a time-frame of 10 years, we can substitute these figures into the calculation to evaluate your future expenses

Future Monthly Expense = 1,00,000 × (1+0.06)10 = 1,00,000×1.79085 = 1,79,085

If inflation remains constant at 6%, it would require around Rs 1.79 lakh each month to maintain the same purchasing power that currently necessitates Rs 1 lakh. Should inflation exceed 6%, this amount is likely to increase.

Also Read: NPS Calculator: How much to save in NPS today for a Rs 1.5 lakh monthly pension post retirement?

Adhil Shetty, CEO of Bankbazaar.com, says, “Something that costs you Rs 100 today might cost Rs 130 or more a few years down the line. This gradual increase in prices affect your savings. That’s why your investment planning isn’t complete without taking inflation into account. It’s not just about growing your money; it’s about making sure your money keeps pace with inflation. If your investments aren’t beating inflation, you could find yourself in a tough spot where your money loses value instead of growing.”

Future Expenses and Impact

High inflation can have a big impact on your lifestyle.

 » Read More

Related Articles

GCCs, IT companies dominate office space

Quarterly transactions in the office market reached a historic high of 28.2 million square feet in the January-March period, shows a Knight Frank report.  Global capability centres (GCCs) were the largest consumers of office space during the period, accounting for 44% of the total transaction volume.  A resurgence in demand from the third-party IT services

Gems and jewellery units to take a big hit

The reciprocal tariff of 27% will jack up customs duties faced by Indian exporters of studded and gold jewellery in the US to 32-34%, including 5.5-7% extant tariffs. Diamond products which currently do not have any tariffs, will cost US importers a 27% import duty. Sabyasachi Ray, Executive Director of the Gems & Jewellery Export

Some pain & some gain: India Inc counts the cost

Corporate India is gearing up for a challenging trade environment in the wake of the 27% reciprocal tariffs imposed by the US on Thursday. While the Trump administration has described the move as its moment of liberation, India Inc leaders feel there are some pain as well as some gain. From India’s perspective, key sectors

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

GCCs, IT companies dominate office space

Quarterly transactions in the office market reached a historic high of 28.2 million square feet in the January-March period, shows a Knight Frank report.  Global capability centres (GCCs) were the largest consumers of office space during the period, accounting for 44% of the total transaction volume.  A resurgence in demand from the third-party IT services

Gems and jewellery units to take a big hit

The reciprocal tariff of 27% will jack up customs duties faced by Indian exporters of studded and gold jewellery in the US to 32-34%, including 5.5-7% extant tariffs. Diamond products which currently do not have any tariffs, will cost US importers a 27% import duty. Sabyasachi Ray, Executive Director of the Gems & Jewellery Export

Some pain & some gain: India Inc counts the cost

Corporate India is gearing up for a challenging trade environment in the wake of the 27% reciprocal tariffs imposed by the US on Thursday. While the Trump administration has described the move as its moment of liberation, India Inc leaders feel there are some pain as well as some gain. From India’s perspective, key sectors

Dusit to expand presence in India, eyes emerging cities

Dusit International, a leading Thai hotel and property development company, on Thursday announced plans to expand its presence in India by launching its luxury and upper-midscale brands in key emerging markets.  The strategic expansion plan builds on the momentum of Dusit’s recent foray into the Indian market with the soft-opening of the contemporary and upscale

FMCG firms expect mixed show in Q4

The quarterly updates of fast-moving consumer goods (FMCG) companies, which has been released so far for the January-March 2025 period (Q4FY25), present a mixed picture of the sector at a time when urban demand has remained weak. Rural demand, in contrast, has been resilient and is expected to improve in the coming months. While Marico