Simple Savings Calculator

How to use this calculator

A savings calculator helps you determine how much you’ll have in the bank over time, based on how much you add to the account and the annual percentage yield (APY) it earns. When you input this information, along with a set number of months or years, the calculator will show you:

• Total amount in your account
• How much you’ll contribute in total
• Total amount of interest earned

Factors that affect your savings

Our simple savings calculator can help you make sure you’re saving enough for your future goals, whether you plan to take a big vacation next year, get married in two years or buy a house in five years. The calculator brings up your results by asking for the following:

• Initial deposit: This is how much you’ll initially contribute to the account. Whether that’s $100 or $10,000, your initial amount is crucial to your money’s growth.
• Monthly deposit: This is the amount you can contribute to the account each month. Decide on this amount according to your monthly budget. Tinker with the amount to see how higher monthly deposits can boost your money’s growth over time.
• Time frame: This is the number of years or months over which you’re calculating interest earnings.
• APY: This is the total amount of interest you’ll earn in a year, expressed as a percentage. An APY includes the effect of compound interest — which is interest on your initial deposit as well as on the interest you’ve been accumulating over time. Find your APY by checking your account details.

Simple savings formula

Behind the scenes, this calculator inserts the APY, number of months, and the initial and monthly deposit amounts into a formula. The formula is:

Where:

• FV = Future Value
• P = Monthly deposit amount
• r = APY as decimal
• n =Total number of months
• I = Initial balance

The first half of this equation — from the P to the plus sign — calculates what you earn on your monthly deposits. The second half, after the plus sign, calculates earnings on your initial deposit.

Understanding your results

The calculator outputs how much interest you can earn over your set timeframe, as well as your total savings account balance. Your “Total savings breakdown” will be shown as:

• Interest earned: Your total interest.
• Total contributions: Your initial deposit and any monthly contributions you specified.
• Initial deposit: The amount you originally contributed to the account.
• Your total savings: A grand total of all of your contributions and interest.

To get the most out of the simple savings calculator, run a few scenarios to see how different contribution amounts and potential APYs could impact your total savings.

For example, say you make an initial deposit of $1,000 to a savings account that earns 4% APY. Here’s what you can earn in two years’ time with two scenarios involving saving different amounts:

• If you add $200 a month, you’ll have a balance of around $6,067, including $267 in interest. 
• If you add $400 a month, you’ll have a balance of around $11,052, including $452 in interest.

Next steps to start saving

To choose how much you add to your savings each month, consider the 50/30/20 budgeting approach. This rule suggests saving 20% of your income, while devoting 50% to needs and 30% to wants. 

Another option is the zero-based budget, for which you allocate a purpose to every dollar you earn. Anything that's left over after your bills and other expenses are covered, you can allocate to savings.

One practical strategy to ensure you save regularly is setting up regular, automated transfers to savings. For instance, if your paycheck’s direct deposit goes to your checking, set up a transfer to take place every payday.