Consumer Savings Calculator Basics
You can use the simple savings calculator to determine how much your saving investments can grow using the power of compound interest. It will help you estimate your total savings over a given period of time. Consistent savings and investments over a number of years can be an effective method to accumulate wealth. Even small additions to your savings add up over time.
People save for various reasons such as for major purchases such as a house and auto. Savings also help for future investments such as college, marriage, vacation or retirement. Whatever the reason for saving, it is better to have a savings plan for these life goals beforehand to ensure a positive financial outcome. This savings calculator will help you determine exactly how much you need to contribute each month to reach your particular financial goal in the time you need.
How To Use This Savings Calculator
This savings calculator will help you estimate your total savings over a given period of time. This calculator considers many different factors such as your initial investment deposit, monthly contribution, annual percentage rate (APR), frequency of compounding interest and the number of years you invest in order to estimate the end balance of savings. Regarding savings accounts in particular, banks often use annual percentage yield (APY) is the interest rate compounded and expressed as an annual figure, wwhich is different and higher than APR. Don’t confuse them.
The savings calculator uses compound interest, where you can adjust the frequency from monthly, 3 months, 6 months or annually. This will significantly affect your savings growth so you should review with your bank what type of savings account you have. The calculator assumes that your monthly contribution occurs at the beginning of the month to take advantage of compounding interest. When selecting a savings account or other investment account (e.g., a money market account), try to select one with the highest APR and compound interest frequency (daily/monthly), with the minimum amount of administrative fees.
You will find that the most important factors affecting your total savings is the monthly contribution, the annual percentage rate (APR), the frequency interest is compounded and the duration of time you invest. Taking advantage of long-term compounded interest (interest gained on interest accumulated) is the key.