How is compound interest calculated?

Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one. The total initial amount of the loan is then subtracted from the resulting value.

How much should I save each month?

Financial experts often recommend the 50/30/20 rule, where 20% of your income goes towards savings. However, the exact amount depends on your financial goals, age, and income. Use our calculator to see how increasing your monthly contributions impacts your long-term wealth.

Savings Calculator - Free Compound Interest Calculator

Calculator Settings

Initial Deposit

Monthly Contribution

Annual Interest Rate (%)

Expected yearly return

Time Period (Years)

Compound Frequency

Tax Rate (Optional)

% tax on interest earned

Total Savings

Interest Earned: $0

Total Contributions

Total Interest

Savings Growth

Yearly Breakdown

Year	Total Balance	Interest Earned	Total Interest

Understanding Compound Interest

Compound interest is often called the "eighth wonder of the world." It is the interest you earn on both your original money and on the interest you keep accumulating. Unlike simple interest, which is calculated only on the principal amount, compound interest allows your savings to grow at an accelerated rate over time.

Our Savings Calculator helps you visualize this power. By adjusting the frequency of compounding (daily, monthly, or annually), you can see how even small differences in rates or time horizons can significantly impact your final balance. The sooner you start saving, the more time your money has to grow.

How to Set Savings Goals

Setting a clear goal is the first step to financial security. Whether you are building an emergency fund, saving for a down payment on a house, or planning for retirement, our calculator can help.

Emergency Fund: Aim for 3-6 months of living expenses.
Retirement: Financial experts suggest needing 70-80% of your pre-retirement income.
Major Purchases: Input your target amount and adjust the monthly contribution to see when you'll reach it.

The Impact of Inflation

While saving is crucial, it is important to consider inflation. Inflation reduces the purchasing power of your money over time. If your savings interest rate is lower than the inflation rate, your money is effectively losing value in real terms.

This calculator uses a "Tax Rate" field to show you your net earnings after taxes. To combat inflation, look for high-yield savings accounts or investment vehicles that offer returns higher than the current inflation rate.