Overview
Showing Values in Actual Currency vs. Today’s Dollars
When planning your finances, it’s important to distinguish between:
Actual Currency – The raw dollar amount you’ll have in a future year (the number printed on the money).
Today’s Dollars – The buying power of that amount in today’s terms (adjusted for inflation).
Even though your salary, savings, or home value may appear larger in the future, inflation reduces how much that money can actually buy.
Example: Salary Growth vs. Today’s Dollars
Let’s say your income grows by 4% per year, but inflation is 2.5% per year.
If we look at Actual Currency (the number on your paycheck), your salary might look like this:
Year | Salary (Actual Currency) |
2025 | $80,000 |
2030 | $97,000 |
2035 | $118,000 |
💡 Looks great, right? But when adjusted for inflation, your salary’s actual buying power is lower:
Year | Salary (Actual Currency) | Salary in Today’s Dollars (Buying Power) |
2025 | $80,000 | $80,000 |
2030 | $97,000 | $85,600 |
2035 | $118,000 | $92,500 |
Even though your salary goes up in Actual Currency, its buying power doesn’t increase as much because the cost of living is rising too.