Purchasing Power Calculator - See How Inflation Erodes Your Purchasing
Power
Prices have a way of increasing from year to year, so most of the stuff
that we buy tends to cost more next year than it does now. Over enough
years, even small annual price increases add up to cause many goods and
services to become more expensive. For instance, everyone knows that a
gallon of milk costs much more today than it did a few years ago.
Another way to look at increasing prices (called inflation) is that the
purchasing power of your dollar decreases with time. For example, in 1950
one dollar bought a lot more stuff than its does today - a candy bar used
to cost a nickel!
The purchasing power calculator lets you see how inflation affects the
purchasing power of your money. Here is an example. Suppose that in 2007
you made a $200,000 salary and in 1970 you made $50,000. Which salary
gave you more purchasing power?
With the purchasing power calculator you convert the $200,000 to 1970
dollars and compare the two salaries. Simply enter 200000 (no dollar sign
or comma) in the Amount field. Enter 2007 in the Convert From date field
and enter 1970 in the Convert To date field. Then press the Calculate
button and $37,433.67 is displayed in the Dollar Value field.
So the 2007 salary, when converted to 1970 dollars, has 24.77 percent
less (($37,433.67 - $50,000) / $50,000) purchasing power than you had
in 1970 with the $50,000 income.
Another way to compare the two salaries is to convert the $50,000 to
2007 dollars. Enter 50000 in the Amount field. Enter 1970 in the Convert
From date field and enter 2007 in the Convert To date field. The result
is $267,139.18, which means that the 1970 salary expressed in 2007 dollars
bought 24.77 percent more than your 2007 salary. The two approaches give
the same logical result - you had more purchasing power in 1970 than you
did in 2007.
Form Input
On the calculator form, enter only numbers (with or without decimal points).
Do not enter:
- Currency symbols like dollar signs
- Commas
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