The savings calculator can be used to estimate the end balance and interest of savings accounts. It considers many different factors such as tax, inflation, and various periodic contributions. Negative starting balances or contribution values can be used.
Calculate your savings to generate the detailed schedule.
Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It's often referred to as "interest on interest" and can cause wealth to grow exponentially over time.
The formula for compound interest is: A = P(1 + r/n)^(nt)
Regular contributions significantly boost your savings over time. Even small, consistent additions to your savings can dramatically increase your final balance due to the power of compound interest.
This calculator allows you to specify both annual and monthly contributions, with optional annual increases to account for salary growth or inflation adjustments.
The length of time you save is one of the most critical factors in building wealth. The longer your time horizon, the more time compound interest has to work its magic. Starting early with regular contributions is the key to maximizing your savings.
These are the most common type of savings accounts offered by banks and credit unions. They typically offer lower interest rates but provide easy access to your funds.
These accounts offer significantly higher interest rates than traditional savings accounts, often from online banks that have lower overhead costs. They're an excellent option for emergency funds or short-term savings goals.
CDs offer fixed interest rates for a specific term, typically ranging from a few months to several years. They generally offer higher rates than savings accounts but require you to leave your money untouched for the entire term to avoid penalties.
These accounts combine features of both checking and savings accounts, offering higher interest rates than traditional savings accounts while providing limited check-writing privileges.
FDIC-insured savings accounts are secure banking products available at most U.S. banks and credit unions that allow you to earn interest on deposited funds. These accounts typically feature:
While often paired together, savings and checking accounts serve different financial purposes:
Money Market Accounts offer a hybrid solution with features of both savings and checking accounts:
Maintain 3-6 months of living expenses in savings to cover unexpected costs like medical bills or job loss. The Federal Reserve indicates most emergencies require about $2,000.
Automatically save 10% of each paycheck to build consistent savings habits.
Note: These guidelines should be adjusted based on individual financial situations, income levels, and specific savings goals.
While there's no legal limit to savings account deposits, consider these important factors:
For long-term wealth building, consider diversifying beyond traditional savings accounts to investments offering better returns.
The most effective approach combines both checking and savings accounts:
This balanced approach ensures you have both accessible cash for immediate needs and growing funds for future financial security.
This strategy involves automatically transferring a portion of your income to savings before you have a chance to spend it. Setting up automatic transfers is one of the most effective ways to build savings consistently.
A popular budgeting guideline that suggests allocating:
Financial experts recommend having 3-6 months' worth of living expenses in an easily accessible savings account for unexpected events like job loss, medical emergencies, or major repairs.