Use this calculator to figure how much your current savings will grow and how much more you'll need to save each month in order to achieve a given savings goal within a given number of years.
Saving, Using Goals as Milestones
If you are a goal oriented saver, there is no better way to predict the monetary results of your future investments than by looking at the numbers and estimating exactly when the cold, hard cash will be in your hands ready to be used. A new car, a year's worth of college tuition, a luxury vacation or an expensive surgery is all within your wallet's reach as long as you begin planning, preparing, and depositing into a high interest savings account well before you will actually need the money. A savings goal calculator essentially gives you the ability to set a personal financial achievement and devise a possible scheme to see your target results met within a certain amount of time.
How to Achieve Your Savings Goal on Target
Of course, the number of months or years it will take for you to reach your particular savings goal all depends on the critical factor of the annual percentage yield (APY) on your account. Simply kick start the calculator with the amount of money you can currently dedicate towards this end savings, the number of years you anticipate gearing up toward your goal, your annual percentage rate and your goal itself. The tool will compute the future value of your current savings if you go that route, as well as the monetary gap between you and your goal and a monthly payment that ensures the gap closing over the specified time period.
For instance, say you were to put aside a mere $1000 into a certificate of deposit (CD) savings account which permits monthly deposits for a $5000 expense that you will owe five years from now. At the compounded interest rate of 1.01%, which is average to high on the current CD market, you will need to pay monthly deposits into the account of $108.65. After five years, the total of your initial investment, regular monthly additions, and interest yield add up to a balance of $5000. Thus, your savings goal was met and you can withdraw your balance plus interest.
Many banks offer clients the option of automatic savings plans. You can often change the name or nickname of these special accounts yourself to represent what you are saving up for, i.e. a New Car Savings Account. In this case, the bank can withdraw a preset amount from your biweekly income check deposits and tuck it safely away in your savings account. These accounts are likely to draw higher interest levels than traditional savings accounts, and are therefore perfect holding places for those with a specific savings goal.
The ability to see exactly how much time and money is required to meet their savings goal allows consumers to be prudent about where the spend their hard earned cash after it has been building up for so many months or years. It is one thing to blow a portion of one's check on something you wouldn't normally splurge on, but when that is money taken away from your ultimate savings goal, it is a different thing altogether as you can see on paper how that action pushes you further from your desired achievement. In this way, setting savings goals can help savers to be motivated and spend smart so that in the end they will be rewarded with the big purchases they really want.