This increased savings calculator shows how cutting small monthly expenses like the cable bill or lattes can snowball into major financial milestones over a lifetime. Whether you’re building an emergency fund or chasing millionaire status, plug in monthly expenses you could remove or reduce and watch your savings grow.
Savings Growth Calculator
See how cutting specific monthly expenses can increase your wealth over time.
Optional Monthly Expenses to Cut and Save
How to use this calculator
This tool was inspired by Nicholas Marrone who built the Mustache Calculator so major hat tip. This calculator is based on the teachings of OG financial blogger Mr. Money Mustache. I adapted this tool to include a graph intended to help visualize savings progress over a set time period and added the ability to see how cutting specific expenses out of a budget will impact longterm wealth. Here’s how to use the tool.
Enter Monthly $ Amount You Could Cut Out from Expenses:
This is the amount you plan to save instead of spend each month. Start with what’s realistic for your budget, even if it’s small.
How much wealth could you build drinking coffee at home?
Annual Interest Rate / Dividend Yield:
The calculator defaults to 8%. I based this on the current dividend yield of the JPMorgan Equity Premium Income ETF (JEPI). The yield of this ETF will change daily, monthly, and annually based on the stock price and dividend payouts.
I’ve been gradually buying JEPI over the past year as part of my longterm wealth building plan. Plus, the ETF pays dividends monthly, making it a little more exciting to track. This is not financial advice! Just sharing what I’m doing and why I entered this as the default.
You can adjust the % of return based on your investment strategy:
- High-yield savings account: 3-5%
- Stock market index funds: 12.8% according to BankRate.
Investment Period (Years):
How long you plan to save. The power of compound interest becomes more apparent over longer periods.
Goal Amount:
The calculator defaults to $1,000, which is based on Dave Ramsey’s recommended starter emergency fund. This is particularly relevant given that 63% of American workers can’t cover a $500 emergency expense without borrowing or selling something.
I believe anyone can reach the starter emergency fund milestone.
Optional Monthly Expenses Feature:
This unique feature helps you identify potential savings from cutting regular expenses. The default example uses Starbucks, as research shows many college students spend $11-$20 per week at Starbucks alone. Frankly, I think this is a pretty reasonable expenditure, but it serves as a starting point to explore.
The Results
When you click the “Calculate Savings” button the calculator breaks down your total savings (what you put in plus what you earned), while highlighting how compound interest makes your money work harder for you through a growth chart.
If you add detailed monthly expenses in your calculation, it also reveals how much money you’re leaving on the table when you spend by line item.
See how turning your monthly expenses into savings can impact your wealth over 10 years.
How the calculations work
The Compound Interest Formula:
A = P(1 + r/n)^(nt)
Where:
A = Final amount
P = Principal (monthly contribution × number of months)
r = Annual interest rate (as a decimal)
n = Number of times interest is compounded per year (12 for monthly)
t = Time in years
Practical Example: Building a Starter Emergency Fund
Scenario:
- Monthly savings: $100
- Interest rate: 4% (high-yield savings account)
- Time period: 1 year
- Goal: $1,000 emergency fund
Calculator Results:
Total Savings: $1253.29
Total Interest / Dividends: $53.29
This scenario shows how achievable a basic emergency fund is with consistent monthly savings for just about anyone.
Related tools:
The True Cost of Commuting to Work: Does it make financial sense to live farther from work? This is another Mr. Money Mustache inspired tool I built to help determine how much wealth you could preserve over time by living closer to work.
About the Author: Brett Lindenberg
