Hijinks Inc.

Longterm Savings Growth

Written by

Aaron Nelsen

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Focus on the big picture, get a savings account with a good interest rate and try and set aside a certain amount of money each month. Even if you’re only putting in $50 a month, it still adds up over the course of a few years. Figuring out just how much you’ll have put into saving, but figuring out how much you’ll have made from interest is somewhat more time consuming, so here’s a simple way to figure out just how much money you might save over an extended period of time.

Savings growth calculator after the jump.


The Calculator

How much money is this account starting with?
$
What interest rate do you expect to earn on this account?
%
How much money will you deposit regularly?
$
How often will you deposit this amount?
How often is interest compounded on this account?
How many years will you continue to make this deposit?
Ready?
When you make your last deposit, your account balance will be:
You will have deposited this much money:
And you will have earned this much money from interest:
 

Fantastic, isn't it? Take 15 minutes to sit down and figure out how much you can comfortably put into savings each month and then shop around for a bank with a good interest rate. I currently have a checking account with a local bank and a savings account with e*trade which has an interest rate of 5% which is one of the highest rates on a savings account I could find, plus it has no maintenance fees and no minimum account balance. I can also transfer money to and from my checking account at my local bank.

If you have a budget set up, add the amount you've decided to save to that budget. Treat it like it's a monthly bill that you have to pay, don't skip any months, or spend your savings on something you don't really need. If you don't have a budget set up yet, do so as quickly as possible, it's one of the best things you can do to insure your financial well being... that is assuming you can adhere to it.

Comments

5 responses to “Longterm Savings Growth”

  1. nikki Avatar
    nikki

    i just had to figure this out for my (mandatory!!!) retirement account for the state. they have a good interest rate and even though i’m not even vested yet (it’d be at 140%, so it really stinks that i don’t get any of that action) i’ll have almost 22k if i don’t take it out til i’m 65. that’s with only 1700 as my initial amount. pretty sweet i think. but the bad part is i get penalized like 35% if i want any of MY! OWN! MONEY! from the account before i’m 59. compound interest is so great.

  2. Aaron Nelsen Avatar
    Aaron Nelsen

    Those are some nice gains… but it might be better to look into a Roth IRA. Where you pay taxes on your money before you put it in, that way you’ll save some money when you end up in a higher tax bracket later on down the road.

  3. nikki Avatar
    nikki

    pay taxes before you put it in? like the income tax i’m already paying? or something else?

  4. Aaron Nelsen Avatar
    Aaron Nelsen

    With a normal IRA the money you put in is taken out of your paycheck before taxes are taken out, with a Roth IRA taxes are taken out of your check, then the money for your IRA. Make sense?

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