Working out finances can be frustrating when trying to develop your savings. Having a calculator can help you quickly estimate how much you can set aside. By adding the payments you can make, and the time you have to save, you can see your saving potential. This can be helpful when preparing for university or organizing your next home purchase. It can even be useful when getting ready for retirement.
Let’s review what this calculator may be used for and how you may use it.
Your savings plan
No matter where you stand financially, there can always be more to gain. Taking control of your finances needs a lot of planning. To increase your savings, you have first to create an effective strategy.
Using our savings calculator can help as a starting point for your savings. With our resources, you can grow your abilities and understanding of your finances. You can even safeguard your future with a plan tailored to your circumstances.
Where should you put your savings?
There are many different low-risk accounts with modest returns where you can put your savings. Each account has different advantages. Here we will review five savings vehicles that you can use to maximize your earnings.
Savings accounts: these accounts are offered by all banks and credit unions and are federally insured. Interest rates are relatively low with slightly better rates for online accounts. These accounts may have certain restrictions for deposit amounts and contribution frequencies. Typically funds cannot be accessed through cheques or ATMs.
High-yield bank accounts: similar to a savings account, high yield bank accounts earn higher interest rates but require larger initial deposits. This account is available through most financial institutions to existing customers. Similarly, the accounts have restricted access to the funds.
Certificates of deposit: also known as CDs are available through most banks and credit unions. These accounts offer higher interest rates for larger deposits and longer maturities. Any money allocated to a CD must be kept in the account for 1 year or 5 years. Otherwise, penalties may apply. Once the account reaches its maturity, the earnings can be added to the CD when it is renewed. Doing this permits you to benefit from favorable interest rates continually.
US Treasury securities: treasury notes are a very safe investment that is fully backed by the US government. These notes are issued from 2 to 10 years and earn interest at a fixed rate every six months. These notes can also be purchased at a discount and exchanged for the full face value at maturity as an additional benefit to the interest earnings.
Bonds: bonds differ from the other savings mediums, as they are a minimal risk investment into a municipal, state, or government-run project. The bond issuer pays interest for the term of the bond and returns the full investment at maturity. Each bond will vary in its risk factor, the rate of return, and term length. Penalties may apply for early withdrawals, and there may be additional risk dealing with corporate bonds.
With this vital information, you can adapt your savings plan to your circumstances. Saving is fundamental to your financial freedom and developing your wealth. You should not take a chance on the calculations.
The sooner you start saving, the better off you will be. With so many options, doing your research can help you to decide which account will work best for you. You can then use your savings for important things like college tuition, home renovations, or vacations to places that you love.
Remember to bookmark this page and save it to the home screen of your smartphone or tablet to access this tool as your goals change. If you found this page useful, you can promote us on social media and help others get started on their savings plan formula too.
What is this calculator for?
The savings calculator is very simple to use. It will help you analyze your current saving habits so that you can meet your saving goals.
Before using the calculator, you should review your budget. Using online banking and past statements can help you figure out where you stand. Then, unnecessary spending should be eliminated.
To calculate your savings potential, we begin by taking the beginning balance of your savings. Then multiply your contributions by the number of years you want to continue saving or investing. Afterwards, your annual rate of return will be used to determine your interest earnings. For interest compounding, it is calculated as interest earned on previous period’s savings, plus new interest income.
With this information, you can try out different returns, payments, and terms. You can compare your results to see how much you will save up by the end of any plan. Doing this, you can find the strategy that will help you reach your goals.
How to use the savings calculator
The savings calculator has two parts: an information intake, and integrated results. The system only needs some basic information about your current savings approach. Let’s review this information together.
Step 1: Add the starting amount of your savings to the first line of the calculator. This is the money you have already set aside for your savings account.
Step 2: On the second line of the calculator add how many years you have to save. You can use the up or down arrows to make this even easier. This can represent a short-term goal like a trip you need to save up for or something more long-term like your first home purchase.
Step 3: Next you can include a rate of return on your savings account. This figure will depend on what type of account your savings are held in and if investments are tied to the account.
Step 4: On the fourth line of the calculator you should add how much to contribute to your savings account. Then add frequency of your payments using the drop-down menu on the fifth line.
Step 5: Finally, select the rate of compounding as daily, monthly, quarterly, or annually.
Step 6: View your results.
You can view different prompts, graphs, and tables to see the potential value of your savings.
Below the calculator inputs is a smart prompt of how much you should be able to save by the end of your savings plan.
The first tab, payments chart, shows the growth of your account based on the time you have to save. You can hold your mouse over any part of the line graph to get a reading of your balance at that point.
The next tab, savings balance, is a list of your savings account balance each year. Here you can also see the interest that you are earning. You can also view the total yearly contributions you are making.