Savings Calculator

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Your savings account isn’t just a safe place to store your extra cash; it can also serve as a tool to grow your wealth over time through interest. 

Whether you’re building your emergency fund, working toward a down payment on a new home, or simply stashing away money to splurge on a gift for yourself, a savings calculator can help you determine how much you’ll need to deposit over a specific period of time to meet your goals. 

How We Calculate Your Savings

To use this savings interest calculator, there are a few details you’ll need:

  • Initial contribution: How much you plan to deposit into your account upon opening. Some accounts require a minimum deposit, so it’s important to know how much you’re able to invest in the beginning.
  • Monthly contribution: Even if you only have a few dollars to spare, begin building the habit of contributing to your savings regularly. You can set up direct deposit from your paycheck or your checking account into your savings on a regular basis to simplify the process.
  • Timeline: The number of months or years you have to meet your goal. If you’re working toward a down payment on a house, you may have a specific time frame in mind. If you’re building an emergency fund, your time frame may be more flexible.
  • Annual interest rate: This is the APY offered on your savings account. Look into whether your account will compound interest monthly, quarterly, or annually. Use this detail to compare different accounts and see the differences in your potential interest earnings.

How to Maximize Savings Interest

The first thing you’ll need to maximize your interest earnings is a savings account with a great interest rate. The national average for interest-earning savings accounts is currently 0.05% APY, but you can earn upwards of 1.5% with a high-yield account.

You can also maximize interest by evaluating how you save.

You may choose to simply contribute a lump sum into your account and allow interest to grow on that sum until you’re ready to take it out. For instance, if you contribute $5,000 to a savings account earning 0.6% APY today, that principal would increase by about $30 after one year.

You can maximize your earnings much more effectively, though, by regularly contributing to your account so there’s more principal available to grow. Use the calculator to illustrate how much faster your money will grow just by contributing $50 or $100 each month to your total savings.

Using the same example, if you put $5,000 into an account earning 0.6% APY today, then contribute an $100 dollars each month, you’d increase your total by about $1,233 after one year, which includes $33 of interest earnings. 

As interest compounds on your growing principal, you’ll reach your savings goal even more quickly.

Pro Tip

Don’t forget to browse our savings rate table to compare different savings accounts and find the perfect match for your needs. And to learn more about savings, check out our Emergency Savings Guide.

How Much Money Should I Save?

The amount of money you should save depends on the purpose of your savings. Your retirement savings, for example, should be much higher than your savings for a new card, but will also take much longer to accumulate. 

Although these short- and long-term savings goals may vary, always make sure to have an emergency savings fund.

Your emergency savings account should have enough money to cover an unexpected expense or help sustain extended income loss. In general, experts recommend saving at least three to six months’ expenses, though some say you should consider aiming closer to nine or 12 months in the current recession.

If you’re just starting to save, it can take time to save that amount, especially if you’re already facing financial hardship. Start by developing a habit of saving any amount you can each month, each week, or whenever you have money coming in. Then, over time, watch the number grow as you begin reaching your savings goal.

Know Your Savings Options

Depending on how you intend to use your savings, there are a few account types to consider. You can use each of these secure, low-risk accounts to stash your cash while earning a better return than a traditional checking or savings account.

  • High-Yield Savings Accounts. These accounts are ideal for short-term savings or cash you’ll want to access in an emergency. Typically, you can make up to six withdrawals per month with no penalty. Look for a high-yield savings account from a traditional brick-and-mortar or online bank that offers a competitive interest rate to boost your savings even further over time.
  • Money Market Accounts. Similar to high-yield savings accounts, money market accounts are highly accessible and may offer competitive interest rates (though not always). Some MMAs come with paper checks or debit cards to make accessing your money even easier, though you may be limited to the same monthly withdrawal limit as other savings accounts.
  • Certificates of Deposit (CD). CDs are the least liquid savings option on our list — in exchange for leaving your money in the account for the full term you agree to upon opening (such as 12 months, 2 years, or 5 years), you can lock in a fixed interest rate which you’ll earn when the term is up. Generally, these interest rates are higher than a high-yield savings or money market account, but you’ll often find little difference in today’s low rate environment.