Savings Calculator
Savings Growth Calculator
Project the future value of your savings with the power of compound interest.
Your savings projection will appear here.
The Magic of Compounding: A Guide to the Savings Calculator
Saving money is a cornerstone of financial security, but the real power of building wealth over time comes from a concept that Albert Einstein reportedly called the "eighth wonder of the world": **compound interest**. Compound interest is the interest you earn not only on your initial savings (the principal) but also on the accumulated interest from previous periods. It's often described as 'interest on your interest', and it's what makes your savings grow at an accelerating rate over time.
This savings calculator is a powerful tool designed to illustrate this principle vividly. It allows you to project the future value of your savings by inputting your initial deposit, the regular contributions you plan to make, the annual interest rate you expect to earn, and how long you plan to save. The calculator will then show you a clear picture of your financial future, breaking down the final amount into the total principal you invested and the total interest you earned. Seeing how much of your final balance comes from growth alone is often a powerful motivator to start saving early and consistently. It transforms the abstract goal of 'saving for the future' into a tangible, achievable plan.
The Formulas Behind the Growth
The calculation involves two main parts: the growth of your initial lump sum and the growth of your regular contributions (which form an annuity).
1. Future Value of a Lump Sum
Your initial deposit grows according to the standard compound interest formula:
FV_initial = PV * (1 + r)ⁿ
- PV is your present value or initial deposit.
- r is the periodic interest rate (your annual rate divided by the number of compounding periods per year).
- n is the total number of compounding periods.
2. Future Value of a Series (Annuity)
Your regular monthly contributions grow according to the future value of an ordinary annuity formula:
FV_contributions = PMT * [((1 + r)ⁿ - 1) / r]
- PMT is your periodic payment or contribution.
- r and n are the same as above.
The total projected value of your savings is the sum of these two components: Total FV = FV_initial + FV_contributions. This calculator automates these complex calculations to give you an instant result.