Savings Calculator
Regular saving plus compound interest produces results that are hard to picture from the numbers alone. This calculator shows what a monthly amount becomes over time.
Formula
FV = PMT × [ ((1 + i)ⁿ − 1) ÷ i ]
- PMT = amount saved each month
- i = annual rate ÷ 12
- n = number of months
£100 a month at 4% for 10 years: £14,725, of which £2,725 is interest
What Regular Saving Builds
Each deposit earns interest for however long it stays invested, so early contributions do far more work than later ones.
Saving £200 a month for ten years at 4% grows to about £29,450. You will have deposited £24,000, so roughly £5,450 is interest.
The same monthly amount over twenty years does not simply double the interest — it multiplies it, because the early deposits have had twice as long to compound.
Rate, Time and Amount
Of the three levers, time is usually the most powerful and the one people underuse. Starting five years earlier typically beats saving a somewhat larger amount later.
In the UK, compare accounts on AER, which standardises for how often interest is compounded so you can judge like with like.
What This Does Not Account For
The projection assumes a fixed rate for the whole period, which savings accounts rarely offer. It also ignores inflation: money growing at 4% while prices rise 3% is gaining roughly 1% in real purchasing power.
Interest may be taxable above your Personal Savings Allowance, and an ISA shelters returns from that entirely.
Quick Reference
| Years | You pay in | Final balance | Interest earned |
|---|---|---|---|
| 5 | £6,000 | £6,630 | £630 |
| 10 | £12,000 | £14,725 | £2,725 |
| 20 | £24,000 | £36,677 | £12,677 |
| 30 | £36,000 | £69,405 | £33,405 |
Frequently Asked Questions
- How much should I save each month?
- A common guideline is 20 per cent of take-home pay across saving and debt repayment, but the useful figure is whatever you can sustain without dipping back into it.
- What is AER?
- Annual Equivalent Rate. It standardises for compounding frequency, so two accounts quoting the same AER genuinely pay the same over a year.
- Is a cash ISA better than a savings account?
- It depends on whether your interest would exceed your Personal Savings Allowance. An ISA shelters returns from tax, which matters more at higher balances and rates.
- Does inflation cancel out my interest?
- Partly. Real return is roughly your rate minus inflation, so 4 per cent growth against 3 per cent inflation is about 1 per cent in real terms.