Savings calculators are straightforward tools that can help individuals determine how much money is needed to be set aside from their paycheck every month to reach a future savings goals. Users can simply use the web-based tool and start calculating how much money they will have after a specified period of time. These financial tools are free to use on most reputable finance websites and do not require much skill. Users can simply fill in the fields and discover just how much money they must put away monthly or annually to save for a home purchase or even to save for early retirement. Read on, and find out how to use a savings calculator and what type of calculations these tools make for the consumer’s advantage.
What Type of Information Must Be Provided?
A calculator cannot make calculations unless specific and accurate information is provided. While every calculator has its own requirements based on the type of calculations it is designed to provide, the information that the user must provide to get the answers they are looking for are usually similar. Users will need to decide if they are going to use a savings calculator that calculates how much will be accrued based on annual deposits or based on monthly deposits. Luckily, converting the annual and monthly savings amounts is easy, so either tool will be useful.
The required fields that must be completed will depend on how detailed the calculations will be. The most accurate calculators will ask users for: the initial balance or savings deposit amount, how much will be saved annually, increase in contributions from year to year, number of years for saving, the before-tax return on savings, and the user’s current marginal tax bracket. Generally, the calculator will pre-populate the historic return on savings. It may also provide users with a detailed chart of Federal tax rates based on income and filing status. Once the fields are completed and the users presses calculate, the user will be directed to the results screen.
What Type of Information Will Be Included in the Results?
Once the fields are completed, the user will be able to see just how much money will be accumulated over the specific period of analysis. What is great about savings calculators that use these factors is that you can increase the amount that is saved over time directly through the tool. The results will include the total amount the user will have in their savings after X number of years. It will also have a chart that shows the growth of the savings account and another chart that will detail the beginning and ending balance of the account each year. This chart does account for earnings and taxes.
Benefits of Using a Savings Calculator
Some individuals spend a great deal of money to sit with a financial adviser just for the professional to enter this same information in a similar savings tool. Wise individuals who want to save money without spending a fortune on financial services can use tools like savings calculators to make these calculations for free online. By using these advanced tools, it is easier for ever for people to set their own personal savings goals and attain these goals in the long run.