Savings Calculator
Project how your savings will grow over time with an initial deposit, regular monthly contributions, and compound interest.
About this Calculator
Project how your savings will grow over time with an initial deposit, regular monthly contributions, and compound interest.
Formula & Calculations
Formula
FV = P(1+r)^n + C[((1+r)^n - 1) / r]Where:
- FV=Future value of the savings account
- P=Initial deposit amount
- C=Monthly contribution
- r=Monthly interest rate (annual rate / 12)
- n=Total number of months
Assumptions
- Assumes a constant interest rate for the entire period.
- Assumes monthly compounding and contributions made at the end of each month.
- Does not account for taxes on interest earnings.
- Does not account for inflation or changes in contribution amounts.
Calculation Examples
Example 1
Saving $200 monthly with a $1,000 initial deposit at 5% interest grows to nearly $33,000 over 10 years.
Example 2
Consistent saving over 20 years with compound interest yields significant growth beyond total contributions.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates a snowball effect where your money grows exponentially over time.
How much should I save each month?
A common guideline is the 50/30/20 rule: allocate 50% of income to needs, 30% to wants, and 20% to savings and debt repayment. Aim to build an emergency fund covering 3-6 months of expenses first.