What is Savings Calculator? Its Benefits and How to Use?

Savings calculator is an algorithm based online tool that allows users to create a detailed savings plan with the help of which you can save money to build a corpus for your future. Regardless of your savings goal, this financial tool is an excellent way to assess your future goals and build a strategy to chase your goals. 

Using this multifunctional tool, you can analyze different elements of your savings goal such as how much can you save? How much time will take for you to reach your goals? What should be the initial saving amount, to begin with? The interest rate you require to get to your desired amount?

The best part about this plan is that you precisely assess and model your future. For instance, based on the advanced features you can add to the rate of inflation and create a real-time plan. This tool allows you to understand the power and importance of savings. The tools not just represent the data in the form of figures but also in graphical form. 

In this article, we will take an in-depth look at the uses and features of a savings calculator and how to use this financial tool. 

Understanding Savings

Savings is one of the most crucial parts of building a corpus. An important point to be kept in consideration is that it is not suitable to place all your funds under the same umbrella. Ideally, you should diversify your savings into different mediums. Some of the most trusted and popular mediums of saving money are as follows- 

1. Savings Account

A savings account is one of the most popular modes of savings not just in the UAE but all across the globe. The primary benefit of allocating your money into a savings bank account is that you get interest over your invested capital by simply putting it in an account. 

2. Fixed Deposit

Another popular savings tool in the UAE that allows users to save money is called a fixed deposit. In the case of a fixed deposit, a user allocates their capital in a deposit that is fixed for a specific period for which a user gets an interest. It is safe, secure, and a popular way of investing money. A distinct feature of fixed deposit is that if you withdraw your money before the minimum period, the user will have to pay a penalty.

3. Call deposit

Call deposit is another saving mode via which a depositor can withdraw funds without paying a penalty. However, there is a minimum amount required to start a call deposit and earn interest over a period. 

Elements of Saving’s Calculator

Before you begin creating a savings plan for your future, it is important to get familiar and accustomed to the elements of a savings calculator. On the basis of these elements, the tool determines the required figure. 

1. Initial Saving Amount and Final Amount

The initial amount is the figure at which a user begins saving the capital. In other words, it can be said that the initial saving amount is the opening balance of your bank account when you start saving. The final amount is defined as the figure the user would want to reach at the end of their saving journey. Financially, the initial and final amount can be also be referred to as the present and future value of the savings timeline of a user. 

2. Interest Rate 

The rate of interest plays an instrumental role in building a savings plan. It refers to the interest applicable over the base amount. 

3. Time period

The time period of saving refers to the frame under which the user plans to save and grow their savings.

4. Compound Interest

It is one of the most important elements of a savings calculator that allows users to get better output. In simple words, compound interest may be defined as the interest earned by a user not just on the base value of saving, but over the interest earned in the previous years of saving.

5. Inflation Rate

This element plays a detrimental role in deciding that a user will reach their designated goal in the defined timeline or not. The inflation rate is inversely proportional to the gains under a savings plan. This element is part of the progressive features of the savings calculator.

How to Use a Savings Calculator?

Using a saving calculator is a very easy task, all you need to do is fill the designated fields in the tool and within seconds the calculator will come up with the desired figure. Furthermore, you can assess the numerical figures in graphical form for a better understanding of the results and savings timeline.

In a Nutshell

Savings calculator is a user-friendly tool with the help of which you can plan and achieve your future savings goal. This tool is absolutely free and provides accurate figures which makes it a reliable and efficient tool. With the help of this tool, the right set of knowledge, and proper planning you can achieve your goals at an accelerated pace.