Inflation and Your Savings Goals: Why £10,000 Today Won't Be Worth £10,000 Tomorrow
Inflation silently erodes the value of your savings over time. Understanding it is the first step to making sure your financial goals stay on track.
If you're saving £10,000 for something five years from now, you might be surprised to find that £10,000 won't quite stretch as far as you expected. That's inflation at work.
What is inflation?
Inflation is the rate at which prices rise over time. In the UK, the Bank of England targets 2% inflation per year. That means something that costs £100 today will cost about £110 in five years.
For everyday purchases, this feels modest. But for big savings goals — a house deposit, university fees, or a retirement fund — it can mean thousands of pounds difference.
A real example
Say you're saving for a £50,000 house deposit, and you plan to buy in 7 years. At 2.5% annual inflation, that £50,000 target grows to roughly £59,000 by the time you need it. If you only saved for £50,000, you'd be £9,000 short.
How Ona Planner handles this
Every calculation in Ona Planner adjusts your goal for inflation automatically. We use country-specific inflation assumptions:
- UK: 2.5%/year
- US: 2.5%/year
- Eurozone: 2.0%/year
- Nigeria: 22%/year
Nigeria's high inflation rate means savings goals there need significantly higher monthly contributions to keep pace — which is why the required monthly savings can look large.
What you can do
The best hedge against inflation is investing rather than just holding cash. Historically, equity markets (like the S&P 500 or FTSE All-Share) have returned well above inflation over the long term. That's why our calculator combines your savings with an expected investment return — to show you how your money can actually beat inflation.
Try it yourself
Use Ona Planner to calculate exactly what you need to save — adjusted for inflation and your country.
Start your plan →