When it comes to your savings, there’s no doubt that discipline pays dividends. Sticking to your routine and depositing as much as you can into your savings account will help you grow your nest egg. Using a calculator can be an effective way of showing you just how much you can earn in interest across an extended period, and these two calculators allow you to do just that.
Savings calculator
How to use the savings calculator
There’s nothing too complicated about this savings calculator. Start by nominating the sum that you’ll have at the start of your savings journey. Add how much will be regularly deposited into your account and how often it’ll be made. A common example of this might be your payslip.
From there, all you’ll need to do is set an interest rate and a saving term. You’ll be able to see in the bar graph to the right how much your savings will grow from both your deposits and the interest you’ll earn over that time.
Case study: Building your interest over time
Harry wants to know how much he can grow his savings over the next five years. His non-touch savings account balance currently sits at $27,500 and has an interest rate of 4.50% p.a. He’s determining how much of his fortnightly payslip he should deposit. The following table shows how much Harry could save and earn in interest over five years with different deposit amounts:
| Account balance | Interest rate | Fortnightly deposit | Balance after five years | Interest earned after five years |
|---|---|---|---|---|
| $27,500 | 4.50% p.a. | $250 | $70,844 | $10,844 |
| $27,500 | 4.50% p.a. | $500 | $107,255 | $14,755 |
| $27,500 | 4.50% p.a. | $750 | $143,666 | $18,666 |
| $27,500 | 4.50% p.a. | $1,000 | $180,078 | $22,578 |
“How long will it take to save” calculator
How to use the “how long will it take to save” calculator
This calculator is even simpler than the last. Because it tells you how long you’ll take to hit your savings goal, just input your current balance, where you want to get to and how much you’re depositing (as well as your interest rate) and the graph will tell you all you need to know.
“How much to deposit” calculator
How to use the “how much to deposit” calculator
The flip side of the “how long will it take to save” calculator, this one tells you exactly how much you’ll need to pay each week, fortnight or month to hit your savings goal. By entering your account balance, savings goal, deposit frequency and saving term (on top of your interest), you can see how much you’ll need to deposit to hit that mark.
Case study: How fast and how much to $100,000?
Lucy is in the property market and needs to save up $100,000 for a deposit on an apartment. She wants to get there as soon as possible, so she runs the numbers on what she’ll need to do to get from her current balance of $75,000 to that magical number:
| Account balance | Interest rate | Weekly deposit | Time to reach $100,000 |
|---|---|---|---|
| $75,000 | 5.00% p.a. | $300 | 1 year, 4 months |
| $75,000 | 5.00% p.a. | $400 | 1 year |
| $75,000 | 5.00% p.a. | $500 | 10 months |
| $75,000 | 5.00% p.a. | $600 | 9 months |
Lucy also wants to know precisely how much she might need to save over different periods to hit $100,000, which the table below demonstrates:
| Account balance | Interest rate | Saving term | Weekly deposit required |
|---|---|---|---|
| $75,000 | 5.00% p.a. | 1 year | $396.58 |
| $75,000 | 5.00% p.a. | 2 years | $156.42 |
| $75,000 | 5.00% p.a. | 3 years | $76.43 |
| $75,000 | 5.00% p.a. | 4 years | $36.48 |
Tips for reaching your savings goals sooner
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Deposit funds as frequently as possible
Although savings account interest is paid out monthly, it’s calculated daily. That means that you stand to gain more from depositing $100 every week compared to $400 every four weeks. If you’re able to do so, frequent deposits can help you maximise your savings.
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Compare savings accounts to find the highest available interest rate
It goes without saying that locking in the highest rate on the market will be good news for your savings. However, you’ll have to take the time to consider options on the market and find the one that best suits your needs as a saver.
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Avoid accounts with unachievable bonus rates
Plenty of high interest savings accounts come with bonus rates, meaning you’ll have to meet certain requirements each month to receive the full interest rate on your savings. This often involves depositing a certain amount or making a certain number of purchases through a linked transaction account. Make sure these are achievable for you before you sign up.
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Create a budget (and stick to it)
When it comes to hitting a savings goal, it pays to put a comprehensive budget together. Analyse your monthly incomings and outgoings to see where you can potentially save more. If that means cutting back on coffee every day or cancelling streaming subscriptions, it’ll probably be worth it in the long run.
