Put in the money you already have in savings, the amount you can add every month and the yearly interest rate your account pays. Then choose the number of years you want to save for and how often the interest is added.
If your interest is taxed, enter the tax rate and the calculator will reduce your interest earnings accordingly. If you want to see what your savings will really be worth, add an inflation rate and you will get the final balance in today’s money.
The goal box is optional but very handy. Type the amount you want to reach, for a deposit on a house, an emergency fund or a holiday, and the tool tells you how many years and months it will take with your current plan. After you press Calculate, you will see the final balance, how much of it you saved yourself, the interest earned and a table with your balance at the end of every year. If the time to reach your goal feels too long, try raising the monthly deposit. A small increase often shortens the wait more than you would expect.
The tax is applied to the rate first: rate after tax = rate x (1 – tax rate). Then the calculator finds an equal monthly growth rate that matches your compounding: monthly rate = (1 + rate after tax / m) raised to m/12, minus 1, where m is how many times per year interest is added.
Each month the balance becomes: old balance x (1 + monthly rate) + monthly deposit. Interest earned is the final balance minus the starting balance and all deposits. The time to reach the goal is found by repeating the same monthly step until the balance is at or above the goal. The inflation adjusted balance is the final balance divided by (1 + inflation) raised to the number of years.