This savings calculator forecasts the final balance and total interest earned on your savings account (fixed deposit & regular adds by case) over a certain no of years. There is in depth information on how to manage your funds below the form.

Starting principal:*
Regular deposit contribution:
Regular deposit frequency:
Annual interest rate:*
Savings made for (term):*

## How does this savings calculator work?

This personal finance tool can help you figure out the growth of your savings account and total earnings in interest you can make, and so to see whether you will achieve your goals or not in due time. It considers the following variables that should be given:

• Starting deposited amount;

• Regular contribution amount if applicable together with its frequency – most recommended and used frequencies are monthly and annually.

• Average annual interest rate which is fixed.

• Term of the account expressed in years.

The algorithm of this savings calculator is based on the formulas explained below together with the results displayed:

-  End balance after the desired term = [A]

[A]=PV * ((1+i/100*T)^n) + Pmt/(i/100*T) * ((1+i/100*T)^n-1)

- Total principal saved (initial deposit + regular addings) = [B]

[B] = PV + (PMT * T)

-  Total interest earned = [C]

[C] = [A] - [B]

Total number of regular contributions = [D]

[D] = n.

Where:

PV = Starting principal

PMT = Regular deposit contribution

I = Annual interest rate

n = Savings made for (term) * T. Where the T values depend on the desired regular contributions frequency as follows:

- Weekly - T value is 52

- Every two weeks - T value is 26

- Monthly - T value is 12

- Every two months - T value is 6

- Quarterly - T value is 4

- Semi-annually - T value is 2

- Annually - T value is 1.

## Example of a result

Let’s assume an individual intends to deposit over 5 years an amount of \$50,000, plus a monthly contribution of \$500 at an interest rate of 3.5%. This will result in the following figures:

End balance after 5.00 years = \$92,280.20

Total principal saved = \$80,000.00

Total interest earned = \$12,280.20

Total number of regular contributions = 60.00

## How to test if you savings goal is realistic?

Financial advisors recommend that every savings plan should start with setting up an appropriate savings goal. Thus you need to know at least few data such as the one asked below, in order to check if your goal is realistic or not:

• Which is the starting principal you are available to deposit?
• Which amount you can afford to save on a monthly or early basis? Is there any other frequency you would prefer in making savings?
• Which is the approximate average annual interest rate you expect to receive from the bank?
• Which is the desired investment term that would best suit you, as you will need to do this effort permanently within this time frame?

Once these details are clear you can simply make an analysis with this savings calculator and see whether the ending balance is at least or preferably equal to your goal. But what to do is that proves unrealistic? Here are few adjustments than can help:

• You can adjust the term to save;
• You can adjust the regular savings you need to make, but ensure you can afford that level;
• You can adjust the initial deposit.

## Why do you need to save?

There are various reasons, amongst them these are the most important ones:

• Because the future is unpredictable and some funds available can help you deal with unwanted events.
• Because through savings you can finance some future hobbies, car buy, travel plans or some home improvements.
• Because your children need to go to college and/or university and you will need to finance their studies.
• Because your family need to be secured or to feel secured.
• Because you and your spouse need to secure a happy retirement.

22 Jan, 2015