Savings Calculator

Savings Calculator

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:

  1. Find out the price of the bike. Let’s say it is 2000 € – and this is our final balance that we want to achieve.
  2. Determine your initial deposit. Let’s make it 1200 €.
  3. Find out the interest rate. Let’s use 5%.
  4. 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.
  5. 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:

  1. Determine the final balance. Let’s make it 3000 €.
  2. Find out monthly balance. Let’s say we can deposit 120 € monthly.
  3. Find out term. Let’s say 9 months is the deadline.
  4. Finally, enter the interest rate. Let’s use 7%.
  5. By entering these data you will find out that you will need to place a 1797.84 € initial deposit.

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