Savings calculator, otherwise called "savings account calculator" is a versatile tool that can help you plan how to save up enough money to buy your dream car, trip, etc. It works in both directions - go ahead to either find out how much you'll save OR how much you need to deposit if you have a certain amount as your goal. It operates on a few variables: initial balance, meaning how much can you put in as an initial deposit; monthly deposit, interest rate and term, meaning how long will you be saving for, be it months or years. Moreover, should you be saving for years, there is a table underneath the savings calculator that will show you what your balance will look like at the end of each year. It's a special kind of a compound interest calculation, with a little twist - monthly deposits.
How savings account calculator works
Because savings account calculator works in different ways, first let's focus on the most basic use - let's say we are saving for our dream bike:
- Find out the price of the bike. Let's say it is
2000 €- and this is our final balance that we want to achieve.
- Determine your initial deposit. Let's make it
- Find out the interest rate. Let's use
- Last but not least, decide when do you want to finish saving. Let's say we are not in hurry and make it
- By entering these data in our calculator, you will calculate that you only have to deposit
26.76 €monthly to buy that bike in 2 years. Congratulations!
The other way to use savings account calculator is to find out what initial deposit you need to place once we know how much we can deposit monthly:
- Determine the final balance. Let's make it
- Find out monthly balance. Let's say we can deposit
- Find out term. Let's say
9 monthsis the deadline.
- Finally, enter the interest rate. Let's use
- By entering these data you will find out that you will need to place a
1797.84 €initial deposit.
In the advanced mode, you can see what's the total contribution and total interest, so that you know. The variable compounding frequency introduces some noise to calculations, go ahead and use the annual percentage yield calculator to get a more standardized picture. The investment calculator does essentially the same thing as the savings tool, but the wording is a bit different, so some people might find it less confusing and more appropriate for their own situation.