Savings Calculator

1. How to Use the Savings Calculator

Our savings calculator is designed for those who wish to understand, calculate, and visualise how their savings might grow over a period of time. Use the calculator to discover how much interest you'll earn on your savings and how that could impact your initial deposit.

Here are some key points to note about the calculator buttons and input boxes:

Currency: Use this to select your preferred currency.
Initial Savings: If you already have some money set aside, you may enter it here. If not, enter 0.
Estimated Interest Rate: Here, you need to enter an estimated yearly interest rate. We've used 5% as the default, but you can enter any amount you like. If you are saving in a standard savings account, check your bank app for details of your interest rate. If you are investing in US large-cap index funds or ETFs, a good estimate can be anything between 5% and 12%.
Savings Time Span: How long do you plan to save for? Use the drag handle on the range slider to enter that information into the savings calculator.
Compound Frequency: How often does your bank pay interest? It is usually the same as the compound frequency but may not always be. Choose the compound frequency that makes the most sense to you from the options available.
Additional Contributions: Apart from your initial deposit, are you planning to save regularly? If so, how much and how often? Enter the amount you plan to save regularly into the Additional Contributions box.
Contribution Frequency: How often were you planning to save those additional contributions? Most people save a small amount monthly after receiving their salaries.

2. How Do I Start Saving?

Starting to save is all about setting realistic goals and establishing a routine that fits your financial situation. Here are the steps to begin:

Assess Your Financial Situation: Understand your income and expenses. Create a budget to see where your money is going and identify areas where you can cut back.
Set Clear, Achievable Goals: Whether you're saving for a vacation, a house, or an emergency fund, having specific goals can motivate you to save.
Create a Savings Plan: Decide how much you want to save each month. Even small amounts can grow over time.
Make Saving Automatic: Set up automatic transfers from your checking account to a savings account. This makes saving effortless and helps build the habit.
Choose the Right Savings Tools: Depending on your goals, different accounts (like high-interest savings accounts, ISAs, or fixed deposits) might be appropriate.
Monitor and Adjust: Regularly review your budget and savings plan. As your financial situation changes, so should your plan.

3. What Is the Best Way to Save Money?

The best way to save money varies by individual circumstances, but here are some universally helpful strategies:

Pay Yourself First: Treat your savings like a bill that must be paid each month.
Reduce Unnecessary Expenses: Cut back on non-essential spending. This could mean dining out less, cancelling unused subscriptions, or shopping less impulsively.
Use Budgeting Apps: Tools like Budget by Koody or even simple spreadsheets can help you track and manage your expenses.
Shop Smarter: Look for discounts, use coupons, and compare prices before making purchases.
Increase Your Income: If possible, find ways to earn extra money through side gigs, freelancing, or selling items you no longer need.
Invest Wisely: Once you have a comfortable cushion of savings, consider investing to grow your wealth over time.

4. What Is Inflation?

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is usually expressed as an annual percentage. For instance, if inflation is 2%, a £1 loaf of bread will cost £1.02 a year later. Inflation is influenced by various factors, including government policies, supply and demand dynamics, and economic conditions.

5. How Does Inflation Affect My Savings?

Inflation can significantly impact your savings in two main ways:

Reducing Purchasing Power: If your savings grow at a rate lower than the rate of inflation, your money buys less over time. For example, if you earn 1% interest on your savings but inflation is 3%, your real return is effectively -2%.
Interest Rates and Investment Returns: Inflation often leads to higher interest rates, which can affect the returns on different types of investments and savings accounts. While this can benefit savers if the rates on their savings accounts increase, it can also negatively affect borrowers with variable interest rates on their debts.