This savings calculator takes into account quite a few different factors like inflation, tax, and different periodic contributions for estimating your end balance in savings. Particularly, when it comes to savings accounts, Annual Percentage Yield that banks give is the rate of interest compounded annually. The starting balances and contribution values in negative can also be used.
Well, there can be different reasons as to why people save money like making any big purchases such as new cars and homes. Savings can also be helpful in preparing for certain things that will come in future like marriages, vacations, college tuition, or even retirement. Regardless of the reason to save, if you don't plan for such events in time, you'll have to face poor outcomes financially. It can be hard, however, to determine what exactly you should be stashing away every month or every year into your savings. Now, that's where a savings calculator can help as it gives you very clear details of what you'll have in your savings each year considering all the given variables.
Savings accounts refer to the bank accounts that are insured by FDIC in the US. They allow account holders to earn some interest on their deposited amounts or savings. Most of the banks open these accounts and there are credit unions and other institutions offering the facility as well. However, the traits of different accounts with different institutions can vary like synergy with the checking accounts within that same institution, APY, and the requirements for minimum balance.
While these accounts are linked to the checking accounts quite often, some major differences do exist. Checking accounts refer to the deposit accounts with financial institutions in which funds deposits and withdrawals are allowed. They have a highly liquid nature and allow you to withdraw your funds without bearing any penalties. These accounts don't pay interest either. The savings accounts, on the contrary, have some withdrawal limitations and also require you to maintain some minimum balance for avoiding penalties.
When you have to decide exactly how much you should be contributing to your savings account, some general guidelines should be followed. Let's take a look!
1. First one is the emergency fund rule. You must keep enough in your savings for covering 3-6 months of your living expenses at least. This can also serve as your insurance to cover any emergency expenses like medical bills.
2. The second is 10% rule. This one requires you to put 10 percent from every paycheck into your savings.
3. Another option is the 50-30-20 rule. According to this, you should consume 50% of your income to buy necessities such as food, bills, and house rent. Allocate 30% to luxuries such as entertainment and dining. And the remaining 20 percent should go into your savings or you can use it for paying off any of your debts.
Now let's come down to this savings calculator and find out how it works. The calculator requires you to give a set of input values including starting amount, annual or monthly contributions towards your savings account, interest rate, compounding schedule, tax rate, inflation rate and the period for which you’d like to make the contributions. Besides, you also have to specify that whether you want to make contributions at the start or the end of every compounding period.
Once you have entered all the values, hit the calculator button and the savings calculator will do the calculations for you. The results show you the end balance, adjustment after inflation, total principal and total interest. Besides, there is a tabular representation of how your account will look like at the end of each year. Interest and tax amounts for each period are also specified in the table as well.
So, use this savings calculator and find out how much you need to save every month or every year to meet your savings goals. It will give you very clear insights into your savings plans and help you save better.