How to Calculate What Money Will Really Be Worth Later
A number that does not change still loses value every year. Here is how to convert between nominal and real amounts, and why a savings rate below inflation means going backwards.
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Practical guides to the calculations behind everyday decisions: the formulas, worked examples, the assumptions each one makes on your behalf, and the mistakes that produce a confident-looking wrong answer.
Every article here starts from a question someone actually needs answered — what a pay rise is worth after inflation, whether the larger pack is really cheaper, how much a set of small subscriptions costs over a year, what a discount stacked on a discount actually comes to. Each one gives the formula, walks through a realistic example with numbers, and then does the part that matters most: explains where the calculation stops being reliable.
Where a calculator on this site covers the same ground, the article links to it, so you can read the reasoning first and then run your own figures. Results throughout are estimates for planning and educational purposes; rates, taxes, fees and personal circumstances change the outcome.
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APR vs APY: How to Compare Interest Rates That Look the Same
Two accounts can both advertise 6% and pay different amounts. The difference is whether the rate accounts for compounding, and which one a provider quotes depends on which looks better.
Profit Margin vs Markup: Why They Are Not the Same Number
A 50% markup is a 33% margin. Mixing the two up is one of the most expensive small-business arithmetic errors, because it silently underprices everything you sell.
How to Calculate a Break-Even Point
Break-even tells you how much you have to sell before you stop losing money. The formula is short; getting fixed and variable costs on the right side of the line is the real work.
How to Calculate Your Net Worth (and What It Actually Tells You)
Net worth is everything you own minus everything you owe. The arithmetic takes ten minutes; deciding what belongs on each side of the line is where the judgement is.
How to Calculate an Emergency Fund Target
The usual answer is three to six months of expenses. That range is a starting point, not a number — here is how to calculate a target that reflects your own costs and how quickly your income could be replaced.
Simple vs Compound Interest: How to Calculate Both
Simple interest is charged on the original amount only. Compound interest is charged on the balance, including interest already added. Over a few years the gap becomes large enough to change decisions.
How to Work Out the Original Price Before a Discount or Tax
If you only know the price after a discount or after tax was added, you can recover the original figure — but not by adding the same percentage back. Here is the correct method.
How to Calculate Percentage Increase and Decrease
Percentage change has one formula, but the order of the numbers decides whether your answer is right or backwards. Here is the formula, three worked examples, and the traps that catch people out.
How to get the most from these articles
Read the assumptions and limitations section before trusting any number for a real decision. Most of these calculations are short — a division, a multiplication, occasionally an exponent — and the arithmetic is rarely where things go wrong. What goes wrong is using a figure that does not match the situation: an advertised fuel-consumption number instead of your own, a total-spending figure where essential spending was needed, or a rate quoted on a different basis from the one you are comparing it against.
Several of the articles overlap on purpose. Percentage change, reverse percentages and stacked discounts are the same underlying idea applied to three different problems, and reading two of them together tends to make the third obvious.