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
1200 €. - Find out the interest rate. Let’s use
5%. - Last but not least, decide when do you want to finish saving. Let’s say we are not in hurry and make it
2 years. - 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
3000 €. - Find out monthly balance. Let’s say we can deposit
120 €monthly. - Find out term. Let’s say
9 monthsis the deadline. - Finally, enter the interest rate. Let’s use
7%. - By entering these data you will find out that you will need to place a
1797.84 €initial deposit.