Starting a new savings account can be exciting, but in order to see the best possible growth of your balance, it’s important to do some early planning. A savings account calculator can be a useful tool, as it allows you to estimate how much you’ll earn on your savings over virtually any period of time.
Savings account calculators are available online and can be used for free. In only a few minutes, you can drastically improve your long-term financial planning with some quick number-crunching.
The Benefits of a Savings Account Calculator
Savings account calculators work by figuring out compound interest on your savings account. To use a calculator, you’ll need your savings account’s annual percentage yield, also known as your APY.
The APY is the percentage of money that you’ll earn on your savings in a year. Savings calculators take compound interest into consideration, so they’re an accurate way to start planning for your future.
You can use a calculator to set a realistic goal for your savings account. For interest, if you’d like to have $10,000 in your savings account in three years, you can use a calculator to figure out how much you’ll have to deposit each month to reach your goal.
Savings calculators can also be used to figure out how much you’ll earn on your initial investment if you don’t make any withdrawals after your initial deposit. This can be useful if you’re trying to set up a nest egg to pay for emergencies or future expenses such as college tuition or a down payment on a home.
Improving Your Savings Habits
If you’re finding it difficult to meet your savings goal, there are a few ways to improve your yield. You can sort through your monthly budget to weed out unnecessary items and recurring bills, which may make it easier to make larger investments.
You should try to plan for regular deposits of a certain percentage of your income. Try to figure out your home’s average monthly budget to pick an achievable goal. Remember that you can make withdrawals from your savings account at any time, although some banks have limits on the number of withdrawals that you can make in a month. This is especially true for high-yield savings accounts.
Opening A New Account
You might also decide to switch to a new bank if your current bank doesn’t offer a very good APY. Remember that a difference of 0.15% APY can mean hundreds or even thousands of dollars in the long run. If you’re serious about using your savings account as an investment, it pays to do some research to make sure that you’re getting the best rate.
Look online for high-interest accounts. It should be fairly easy to find online banks and credit unions that offer savings accounts with high APYs, as the online banking market is very competitive. Remember to use savings account calculators to compare available rates. This will make it much easier to plan regular deposits to meet your savings goal.
You should check to make sure that your bank has good customer service and that it offers features like debit cards for easy emergency withdrawals. If you’re having trouble saving, you might also ask whether your bank can directly deduct money from your checking account and add it to your savings account on a regular basis, as this is one of the easiest and fastest ways to grow your balance.