Savings is the backbone of a financially strong future. With a million expenses that need to be incurred, depending on monthly earnings is not enough. You need a dependable savings fund that can offer you financial protection against any financial contingencies or manage basic present and future expenses.
But knowing how much savings you need, or the savings you will have after a period of time is essential. This is where a savings calculator comes in.
The savings calculator estimates the savings fund value according to the saving accounts’ interest rates. It offers an estimate of future savings based upon your initial investment, frequency of investment, periodic investments, bank’s interest rate, and investment tenor. It uses the power of compounding to grow your savings.
A savings calculator is easy to use. In the formula box of the simple interest calculator, the account holder can enter the principal balance, annual percentage rate, and period in the form of days, months, and years. The interest on the amount and the value of the savings fund accumulating interest will be shown by the calculator.
Financial Planning Using A Savings Calculator
Financial planning gives meaning to one’s goals as well as dreams. It enables you to understand your desired goals as well as different aspects of finance. Planning motivates individuals to keep an eye on inflation. With a savings calculator, Individuals can plan their budget more effectively.
They can have a deeper insight into their finances. They can get a good idea of exactly the amount to be spent in certain years. Individuals can also be informed of the returns their investments need to generate to meet their objectives.
Additionally, a savings calculator can also help build financial discipline within individuals. It can encourage individuals not to waste their money and monitor their savings and spending using a savings calculator.
How to Calculate Savings Interest manually?
Even though it’s best to use a savings interest calculator to calculate the interest amount on your savings, you can also do it manually. Here’s how:
The formula for calculating saving accounts interest A = P (1+rt)
The simple saving interest is a rate at which users borrow as well as lend money. When a borrower receives funds from a lender, the lender receives additional funds in return. The principal refers to the borrowed funds that are granted for a specific period.
Interest is the additional sum that must be returned to the borrower for the use of the borrowed funds.
By dividing the principal by the number of intervals and interest rate, individuals can determine the simple saving interest. Individuals do not have to pay any interest and simple saving interest does not compound.
In the case of simple saving interest, the fee is applied to the current month's interest, and the remaining sum is deducted from the principal.
A = P (1+rt)
The Principal Amount is P.
R is the interest rate.
t = the number of years.
A = Total amount accumulated (Both principal as well as the interest)
A - P is an interest.
How is a Simple Interest Calculator Used for Savings?
An individual can see the simple interest they have accrued on any deposits using the tool Simple Interest Calculator. Using the straightforward saving interest calculator:
- Simple interest must be chosen as the interest type.
- The principal sum is entered.
- The yearly rate of interest is then entered.
- The period must be specified in the day, week, quarter, and years.
- The simple interest you have accrued on the deposit will be displayed by using the savings interest calculator.
How to Increase your Savings?
There are lots of ways of increasing savings. Traditionally, you can control your expenses. Although it's essential for financial discipline, it's not a robust or systematic way of increasing your savings.
Having said that, savings can be increased by investing in government saving schemes, depositing earnings in savings accounts, or investing in savings cum investment plans such as SIP that multiply your wealth over a period of time.
If you are wondering what is SIP, it is a facility that enables an investor to make fixed investments in the mutual fund scheme of their choice at predetermined intervals.
Building savings through a savings account is also another way. Even though it offers guaranteed returns and investment safety but low returns.
The Final Thoughts
Financial planning is incomplete without savings. If you wish to meet your savings goals, it’s highly recommended that you use a savings interest calculator. It’s simple, easy to use, and gives you accurate results in a matter of clicks.