What are your future plans? Do you want to buy a house? Are you planning your retirement? Reaching any long-term financial goal requires a good savings plan. But while the idea of saving money sounds easy, it takes real discipline and hard work to follow through.
Other financial obligations can make it difficult to save money. And even if you start off on the right foot, a change in your financial situation can throw you off track. But you shouldn’t let this stop your efforts. There are online tools to help you, and if you’ve been unable to get your savings account off the ground, an online savings calculator can help reach your goals.
A savings calculator is a simple way to estimate how much your savings will be worth in the future. These calculators are user-friendly, and you only need to provide a few numbers.
Here are four keys for using a savings calculator to reach your goals.
1. What are your savings goals?
Before you input any information into the calculator, you need a clear idea of your savings goals. Knowing what you’re working towards is the best way to keep your savings account on track. Some people decide to save money just because. There is nothing wrong with this reasoning. But without an end goal in mind, it’s definitely harder to stick with a savings plan.
2. Give yourself a timeline
Don’t just save aimlessly toward your goal. A saving calculator will take all the information you input and use this to help you create a doable savings plan. To benefit the most, you will need to determine a savings timeline. In other words, how many years will you be saving? Let’s say you’re saving money to purchase a home. When would you like to make this purchase? Six months? Two years? Five years?
3. Determine how much you’re able to save
After establishing your timeline, decide your initial deposit, plus how much you’re able to save each month. The latter is the hardest part of developing a saving plan, as your income and financial situation can change rapidly. Even so, focus on your present income. The more you’re able to contribute each month, the sooner you’ll meet your financial goal. Take a look at your personal budget. Can you cut back in certain areas – perhaps eat out less or shop less? Remember, saving money takes discipline, and reaching goals may call for sacrificing the things you enjoy.
4. Compare interest rates with different banks
To estimate how much your savings will be worth in the future, you will need to input an interest rate into the savings calculator. This can be tricky if you’re not familiar with average rates. However, you shouldn’t guess or enter any random rate. To accurately estimate how much your savings account will earn, contact a few local banks and compare savings account options. What is the average rate for different savings products? Once you have a clear idea of rates, enter this information into the calculator.
This is the last piece of information needed. Hit calculate. Based on your initial deposit, your saving’s timeline, the amount you’re able to contribute each month and the interest rate on your account, the saving calculator can then estimate the future value of your account, thus helping you assess when you’re able to reach your financial goals.
){kind=link}