Savings Calculator
See how your savings grow over time with regular deposits and compound interest. Enter a starting balance, monthly deposit, rate, and timeframe.
Assumes monthly deposits and interest compounded monthly at a steady rate. Savings rates change over time.
How to use this calculator
Enter four inputs to see your savings projection:
- Starting balance — the amount already in the account; enter 0 if you're starting fresh
- Monthly deposit — the amount you plan to add each month; enter 0 if you're not adding regularly
- APY (annual percentage yield) — the rate your account earns; check your bank's disclosure or current rate page
- Years — how long you plan to save before needing the money
You'll see your projected future balance, the total deposited, and the total interest earned. Try adjusting the monthly deposit or the years to see how much each variable moves the outcome. Even small increases in the monthly deposit add up significantly over longer periods.
How compound interest works in a savings account
Compound interest means that you earn interest not just on your original deposits, but on the interest you've already accumulated. Each compounding period, the balance grows — and that larger balance then earns interest in the next period. Over time, this creates a snowball effect where the balance accelerates.
The difference between compound and simple interest becomes more pronounced over longer periods. With simple interest, you earn a fixed dollar amount each year based on your original deposit. With compound interest, the dollar amount earned grows each year because the balance grows. Over 10–20 years, this difference can be tens of thousands of dollars.
Three variables control how much you benefit from compounding:
- Rate (APY) — higher rates accelerate compounding
- Time — the longer you save, the more compounding periods work in your favor
- Consistency — regular monthly deposits keep fueling the base that earns interest
Worked example — step by step
Start with $1,000, add $300 per month, at a 4% APY (compounded monthly), for 10 years:
- Monthly rate: 4% ÷ 12 ≈ 0.3333%
- Future value of the $1,000 starting balance: $1,000 × (1.003333)¹²⁰ ≈ $1,491
- Future value of 120 monthly $300 deposits: $300 × [(1.003333)¹²⁰ − 1] ÷ 0.003333 ≈ $44,099
- Combined projected balance: ≈ $45,590
- Total deposited: $1,000 + ($300 × 120) = $37,000
- Total interest earned: $45,590 − $37,000 ≈ $8,590
Now extend the horizon to 20 years with the same inputs: the balance grows to roughly $109,000, with total deposits of $73,000 and interest of about $36,000. Interest as a share of the total jumps from roughly 19% at 10 years to about 33% at 20 years — demonstrating how compounding becomes increasingly powerful the longer you save.
How to interpret your result
The future balance is a nominal number — it doesn't adjust for inflation. A balance of $45,000 in 10 years will buy less than $45,000 buys today. If you want a rough inflation-adjusted estimate, subtract the expected inflation rate from the APY. For example, at 4% APY with 3% inflation, re-run the calculator at 1% APY to see the real (inflation-adjusted) balance.
The interest earned figure shows what compounding has contributed beyond your own deposits. This is the value of time and rate working together. If interest earned is a small fraction of the total, it usually means the time horizon is short and/or the rate is low — both of which are worth reconsidering if possible.
Common mistakes to avoid
- Confusing APR and APY. Banks often advertise both. APY includes compounding and is the correct number to enter in this calculator. APR does not reflect compounding and will produce a slightly lower projection than the actual account performance.
- Leaving savings in a low-rate account out of convenience. The difference between a 0.5% APY traditional savings account and a 4%+ APY high-yield savings account is dramatic over time. On $10,000 saved for 10 years, the difference is thousands of dollars in interest.
- Not adjusting for taxes on interest. Interest in a standard taxable savings account is taxed as ordinary income each year. In a 22% tax bracket, a 4% APY nets closer to 3.1% after tax. Savings within an IRA or other tax-advantaged account avoid this annual drag.
- Treating the projection as guaranteed. For savings accounts, the rate can change — banks adjust APYs as market conditions shift. CDs lock in a rate, but savings account rates float. Recheck your actual rate periodically and update the projection.
- Setting a monthly deposit you can't sustain. Consistency matters more than the dollar amount. A smaller deposit you make every month without fail outperforms a larger deposit you make only occasionally. Automate the transfer to make it effortless.
The formula
Future Balance = Starting Balance × (1 + r)n + Monthly Deposit × [(1 + r)n − 1] ÷ r
Where: r = monthly rate (APY ÷ 12), n = total months (years × 12).
Interest Earned = Future Balance − (Starting Balance + Monthly Deposit × n)
How we calculate this
We calculate the future balance using monthly compound interest: each month, the current balance is multiplied by (1 + APY ÷ 12) and the monthly deposit is added. This is repeated for each month in the savings period. Total deposits equal the starting balance plus all monthly contributions. Interest earned equals the projected balance minus total deposits. Results are pre-tax nominal estimates.
Sources
Frequently asked questions
How will my savings grow over time?
Your balance grows from two sources: your regular deposits and interest compounding on the running total. The calculator projects the future balance and shows how much comes from your deposits versus interest earned. The longer the time horizon, the larger the share that comes from interest rather than deposits.
What is APY and how is it different from an interest rate?
APY (annual percentage yield) reflects the real rate of return including the effect of compounding within the year. A savings account that compounds monthly at a 4.0% nominal rate will have an APY slightly above 4.0%. When comparing savings accounts and CDs, always use APY — it's the most apples-to-apples comparison across products that compound at different frequencies.
How much should I save each month?
The amount depends on your goals and timeline. A common rule of thumb is to save at least 20% of income (combining emergency fund, retirement, and other goals), but any consistent amount helps. Use the calculator to reverse-engineer the answer: decide your target balance and date, and adjust the monthly deposit until the projection meets your goal.
Does this calculator account for taxes or inflation?
No. Interest in a taxable savings account may be subject to ordinary income tax in the year earned, reducing your real return. Inflation reduces purchasing power over time, meaning the future balance will buy less than the same number of dollars today. Treat the result as a pre-tax, nominal estimate and consider tax-advantaged accounts (like a high-yield savings in an IRA) to reduce the tax drag.
What compounding frequency does this calculator use?
The calculator compounds monthly, which is standard for most savings accounts and money market accounts. If your account compounds daily (common at many online banks), actual growth will be marginally higher than shown. For typical planning purposes, monthly compounding is an accurate approximation.
What is the difference between a savings account and a CD?
A savings account lets you deposit and withdraw freely; your APY can change over time as the bank adjusts rates. A certificate of deposit (CD) locks in a fixed rate for a set term (e.g., 6 months, 1 year, 5 years) but charges a penalty for early withdrawal. CDs typically offer higher APYs for longer terms. Both work with the same compound-interest math this calculator uses.
How much should I keep in an emergency fund?
Most financial planners recommend 3–6 months of essential living expenses in a liquid, easily accessible savings account. Establishing an emergency fund before focusing on other savings goals helps you avoid withdrawing from investments or taking on debt when unexpected expenses arise.
Does the starting balance matter as much as monthly contributions?
Both matter, and the relative importance depends on the time horizon. A higher starting balance has more years to compound, so it has an outsized effect over long periods. Monthly contributions dominate in shorter timeframes because there isn't as much time for compounding to amplify the starting amount. For most savers building from scratch, consistent monthly contributions are the primary driver.