You’ve just entered the workforce, so you only have $500 for an initial deposit, though you expect to make monthly contributions immediately, and you’ve found an account that nets 4.50% APY. Let’s say you want to buy a home in five years, and you need to save up $10,000 for a downpayment. In this case, saving $180 a month, in addition to interest, will bring your six-months of savings to just above $2,000. How much should you save each month to reach $2,000? The only thing missing is the monthly contribution. You find a savings account that pays 4.50% APY and you’re willing to join that bank, so you put in 4.50% as the APY in the calculator. Using the calculator, plug in the $900 as your initial deposit and six months for the length of time. In this example, the entire trip will cost $2,000 and you’ve only got $900 right now. While you can use one of the best travel reward credit cards, it’s smart to have the money ready to be able to pay it off. Imagine you’ve got six months to save up for the vacation of your dreams. Real-life examples: How a savings calculator can help Saving for a vacation If you have extra funds that you don’t need to access and can put away for a couple months or more, consider getting a certificate of deposit (CD). The longer you keep your funds in an account, the more you’ll earn. It’s a percentage because exactly how much you earn is based on the amount of money deposited and how long it’s there. This is how much money you earn by keeping your cash in a savings account. It can be helpful to automate this and have your bank sweep some of your paycheck to your savings each month from your checking account.Īnnual percentage yield (APY). Will you add to your savings every month? If so, that’s your monthly contribution. As a baseline, here’s how much you should have in savings. If you already have an account and you want to calculate your savings from today onward, you can count the initial deposit as however much you currently have. Some banks require a minimum amount to open a savings account while others don’t.
This is the amount you put in the account once it’s opened. What is a savings calculator and how does it work?Ī savings calculator does the math for you, estimating how much money you’ll have in a savings account based on four factors:
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