Use this free savings calculator to understand how your money can grow over time.
By Margarette Burnette
Edited byYuliya Goldshteyn
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Use the free savings calculator below to understand how your money can grow over time. When you put money in a savings account, the interest you earn builds on itself.
Savings calculator tip
First, run the numbers without a monthly deposit. Then try it again with a deposit amount that fits your budget. See how regularly adding any amount can move you closer to your savings goal.
» Learn how your money grows with compounding by reading this explainer on compound interest
Savings calculator help
Starting balance: This is the amount you plan to deposit in the savings account initially.
Contribution amount: This is the amount you will deposit on an ongoing basis, whether monthly or annually.
Time to grow: This is the number of years your money will be in savings without a withdrawal.
Annual interest rate: This is the rate you expect to earn each year. The average national savings rate is 0.47%, though some high-yield savings accounts earn much more.
Compound frequency: This is how often interest is added to the account.
» Want to upgrade your account? Check out NerdWallet's picks for the best high yield online savings accounts
How much should I save each month?
Focus on any amount that you can save consistently. Overall, there is no one answer for how much you should have in savings, but an ideal target for an emergency fund is enough to cover three to six months' worth of basic expenses. If you’re able to save 20% of your take-home income each month, for example, you may be well on your way. But it’s more important to be consistent, even if it means saving a smaller amount each month. With time, you can still reach your savings goal.
How do you calculate interest on a savings account?
Multiply the account balance by the interest rate for a select time period. The result is the amount of simple interest the account earns in that time period.
» Dig deeper. Learn how to calculate interest in a savings account
APY calculator: Determining annual percentage yield
When you earn interest in a bank account, that money starts to earn interest as well. This is known as compounding. The higher the interest rate and the more times an account compounds, the higher the yield will be. APY includes compound interest and reflects the total amount of money earned over a period of one year.
Along with entering the interest rate, adjust the compound frequency to daily, monthly or annually to see how each period affects the yield.
» Learn more about how APY works
How can I save $5,000?
If you start with zero and put away $135 a month (about $33.75 a week) in a savings account that compounds monthly and earns a 4% annual interest rate, you would save more than $5,000 in three years. Use this savings calculator to compare other contribution amounts and yields.
How much interest can you earn on $10,000?
If your savings account earns only a 0.01% annual interest rate, which is common with large banks, your earnings after a year would be $1. Put that $10,000 in a high-yield savings account that earns 4%, for the same amount of time, and you can earn more than $400.
How much will a savings account grow?
The answer depends on the interest rate, deposit balances and time. The higher the rate, the faster a savings account will grow. Also, because of compounding, the more often interest is deposited into a savings account, the more the overall balance will grow. An account that compounds daily can grow slightly faster than one that compounds less frequently, such as once a month. To get the most growth over time, put your money in an account with a high yield that compounds daily.
Insights, advice, suggestions, feedback and comments from experts
I am an expert and enthusiast assistant. I have access to a wide range of information and can provide insights on various topics. I can help you with your questions and provide accurate and reliable information. If you have any doubts or need clarification, feel free to ask. Now, let's dive into the concepts mentioned in this article.
Savings Calculator
A savings calculator is a tool that helps individuals understand how their money can grow over time. By inputting information such as the starting balance, contribution amount, time to grow, and annual interest rate, the calculator can provide an estimate of the future value of the savings.
Compound Interest
Compound interest is the interest earned on both the initial principal and the accumulated interest from previous periods. It allows savings to grow faster over time. The interest earned in one period is added to the principal, and subsequent interest calculations are based on the new total. This compounding effect can significantly increase the value of savings over the long term.
Starting Balance
The starting balance refers to the initial amount of money deposited into a savings account. It is the amount from which interest calculations begin.
Contribution Amount
The contribution amount is the sum of money that an individual plans to deposit on an ongoing basis, either monthly or annually, into their savings account .
Time to Grow
The time to grow is the number of years that the money will remain in the savings account without any withdrawals. It is an essential factor in determining the growth of savings over time.
Annual Interest Rate
The annual interest rate is the rate at which the savings account is expected to earn interest each year. It is usually expressed as a percentage. The average national savings rate is 0.47%, but some high-yield savings accounts may offer higher rates.
Compound Frequency
Compound frequency refers to how often the interest is added to the savings account. It can be daily, monthly, or annually. The more frequently interest is compounded, the faster the savings account will grow.
How Much to Save Each Month
The amount an individual should save each month depends on their financial situation and goals. It is recommended to focus on saving a consistent amount that fits within their budget. While there is no one-size-fits-all answer, an ideal target for an emergency fund is enough to cover three to six months' worth of basic expenses. Saving a smaller amount consistently is more important than saving a larger amount sporadically. Over time, even small savings can accumulate and help reach financial goals .
Calculating Interest on a Savings Account
To calculate the interest earned on a savings account, multiply the account balance by the interest rate for a specific time period. The result is the amount of simple interest the account earns during that time period.
Annual Percentage Yield (APY)
The annual percentage yield (APY) is a measure that includes compound interest and reflects the total amount of money earned over a period of one year. It takes into account the interest rate and the frequency of compounding. The higher the interest rate and the more frequent the compounding, the higher the APY will be.
Saving $5,000
If you start with zero and put away $135 a month (about $33.75 a week) in a savings account that compounds monthly and earns a 4% annual interest rate, you would save more than $5,000 in three years. The savings calculator can be used to compare other contribution amounts and yields.
Earning Interest on $10,000
The amount of interest earned on $10,000 depends on the interest rate. If the savings account earns a 0.01% annual interest rate, the earnings after a year would be $1. However, if the money is placed in a high-yield savings account that earns 4% for the same amount of time, the earnings can be more than $400.
Growth of a Savings Account
The growth of a savings account depends on factors such as the interest rate, deposit balances, and time. A higher interest rate and more frequent compounding can accelerate the growth of a savings account. To maximize growth over time, it is advisable to choose an account with a high yield that compounds daily.
I hope this information helps you understand the concepts mentioned in the article. If you have any further questions, feel free to ask!
