It is reassuring to see a savings balance grow. It is less reassuring when rent, food, and travel cost more than they did last year. If prices rise faster than your interest, your money buys less even though the number in the account is higher.
A useful check is the return after inflation. Tax can reduce what you keep as well. The rate on the advert is only the starting point.
A simple example
Suppose €50,000 earns 3% in a year while prices rise 4%. The account has more money in it, but its buying power has slipped. The precise maths can be a little more detailed than subtracting one number from the other, but that simple comparison is a fair first check.
Cash still matters
Even when savings rates feel low after inflation, you still need easy-access money for emergencies and near-term bills. That cash helps you avoid expensive borrowing, or selling investments at a bad time.
The mistake is leaving money you will not need for many years in a low-rate account indefinitely because it felt safe during a worrying month. Short-term safety and long-term growth are different jobs.
Practical steps
For money that must stay available, compare better savings rates — rising prices make a lazy low rate more costly. For money with a clear future date, compare fixed terms. For longer-term goals, some people use diversified investments that have historically grown more than inflation over long periods, knowing there are no guarantees in any single year.
If most of your savings have sat in one account “until things settle down,” ask how long that has already been going on. Settling down is not a date. Your plan needs dates.