Savings Calculator
Calculate how your savings will grow over time with regular contributions and compound interest. Whether you are saving for an emergency fund, a down payment, or any financial goal, this calculator shows you exactly how your money can grow through the power of compounding.
Year-by-Year Growth
To reach your goal faster, increase monthly savings to:
How to Use This Savings Calculator
Using this savings calculator is straightforward. Enter your starting balance, which is the amount you have already saved in your account. Next, input your planned monthly contribution, the amount you intend to deposit each month. Set the expected annual interest rate (APY) based on your savings account or investment vehicle. Specify how many years you plan to continue saving, and select your compound frequency from the dropdown options.
Click the "Calculate Savings Growth" button to see detailed projections. The results show your final balance, total deposits, interest earned, and growth percentage. The visual chart breaks down your contributions versus earned interest for each year, helping you visualize the power of compound growth over time.
What is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only earns on the original amount, compound interest allows your money to grow exponentially over time. The more frequently interest compounds, the faster your savings grow.
This concept is so powerful that Albert Einstein reportedly called compound interest the eighth wonder of the world. The key insight is that your interest starts earning its own interest, creating a snowball effect that accelerates your wealth accumulation. For example, $10,000 earning 5% annually will grow to $16,289 in 10 years with monthly compounding, versus only $15,000 with simple interest.
The frequency of compounding matters significantly. Daily compounding will yield slightly more than monthly compounding, which yields more than quarterly or annual compounding. Most high-yield savings accounts compound daily or monthly, maximizing your returns.
The Compound Interest Formula
The formula for compound interest with regular contributions combines two components:
A = P(1 + r/n)^(nt) + PMT x [((1 + r/n)^(nt) - 1) / (r/n)]
Where A is the final amount, P is the principal (starting balance), r is the annual interest rate expressed as a decimal, n is the number of times interest compounds per year, t is the time in years, and PMT is the regular payment amount. The first part of the formula calculates growth on your initial deposit, while the second part calculates the compounding effect on your regular contributions.
Types of Savings Accounts
Different savings vehicles offer varying interest rates and features. Traditional savings accounts at brick-and-mortar banks typically offer lower rates, often below 0.5% APY. High-yield savings accounts, usually offered by online banks, provide significantly better rates, often between 4% and 5% APY. Money market accounts combine savings features with limited check-writing privileges. Certificates of Deposit (CDs) lock your money for a fixed term in exchange for guaranteed higher rates.
Tips to Maximize Your Savings
- Start early - time is your greatest ally with compound interest, even small amounts grow substantially over decades
- Automate your savings by setting up automatic transfers on payday to ensure consistent contributions
- Shop for high-yield savings accounts with competitive APY rates and no monthly fees
- Increase your contributions whenever you receive a raise or bonus
- Avoid withdrawals to let compound interest work uninterrupted
- Consider laddering CDs to balance accessibility with higher rates
- Review and compare rates quarterly as banks frequently adjust their offerings