Savings Goal Calculator – How Much To Deposit
If you have a savings goal, this handy Savvy calculator will show you how much you need to deposit to achieve it
Plan to achieve your financial goals
Achieving your financial goals is all about planning in advance for your future needs. Savvy’s savings goal calculator is a useful tool in your financial toolbox, as it’ll help you calculate how much you need to put away per pay period in order to achieve your savings goal. Compare and crunch the numbers with Savvy today.
Savings goal calculator explained
How do I use the savings goal calculator?
This savings target calculator is easy to use and will help you find out how much you need to deposit regularly to achieve your financial goal in a set period. Simply type in how much you’ve saved up already, your financial goal, the interest rate you’re earning on your deposit and how often you’re making further contributions to your savings. From there, you can enter your saving term, which is the timeframe within which you aim to save that sum of money.
Use the green arrow to change the frequency of your deposits from weekly to monthly or fortnightly. Click anywhere on the calculator page to see how much you will need to contribute each fortnight or month to make your nest-egg dream a reality.
If you play around with the different input fields in the financial goal calculator, you’ll soon begin to see how increasing the size of your deposits, sometimes by just a small amount, and making deposits as frequently as possible can drastically alter how long it will take you to reach your savings goal.
How does compound interest grow my savings faster?
Compound interest is also known as ‘interest on interest’ – because it means that you are paid interest on the principal sum you deposited, plus also on the interest earned by your deposit.
For example, if you deposit $1,000 with 2% p.a. compounding interest, at the end of a year you will have $1,020, with the $20 being interest earned. The following year you will be awarded interest on $1,020, not just the initial $1,000 you deposited. In this way, your savings will grow far more rapidly than if you were just paid interest on your initial principal deposit sum.
Is it worth putting my savings into a term deposit instead?
That will depend on why you are saving and the time period of your savings plan. A term deposit is when you agree to lock away your savings for an agreed period of time (the ‘term’ of your deposit) in return for a fixed interest rate. The interest offered on term deposits is dependent on the length of the term, but tend to be slightly higher than the interest offered on high-interest savings accounts.
The downside to term deposits is that your money is locked away, and if you do need to access it in an emergency, you will possibly have to give notice and will have to pay a penalty fee for breaking your term agreement.
Top tips for achieving your savings goal faster
Make sure that as your nest-egg grows, it works really hard for you by earning interest! Compounding interest is very effective in helping you to grow your savings, so make sure if you do have a lump sum, it is in a high interest-bearing account.
Use the financial goal calculator to work out the size of repayments needed to achieve your savings target, but don’t be constrained by this amount. If you’re able to, deposit more than the minimum required savings to build more interest faster, thus bringing your savings goal closer.
If you have your savings in an account that is easily accessible, it’s too easy to be tempted to withdraw money for treats or special occasions. However, you’ll be going backwards if you do dip into your savings and all your hard work and sacrifice could be lost if you are tempted to withdraw funds, so you should resist the urge to splash out.