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An essential part of being financially responsible has to do with money-saving. One can consider money-saving as a boat to save you from drowning in a financial crisis. Even if you are earning well today, it doesn’t mean you always will. There will come a time, when you have to depend on your savings – be it to pay for your usual expenses, medical emergencies, or other necessary expenditures.
Savings are necessary and they have to be regularized for a financially sound future. You need to have a savings plan. A savings calculator can be your life savior in that regard. It can help you create the most reliable savings plan for yourself.
What is a Savings Calculator?
A savings calculator is an online calculator, often provided by financial and insurance institutions, that can help predict the savings you can generate over a period of time. A savings calculator can also tell you about the rate at which your savings can grow over time and the amount you need to save every month to meet your savings target.
A Few Tips to Consider While Using a Savings Calculator
1. Know Why You Want to Save
Knowing why you need to save helps you stay motivated and consistent with your savings goal. So, before you start saving, know your ‘Why’. Having said that, the reasons can be many. For instance, if you have a family, then you might want to save for:
- Buying a House
- Medical Emergencies
- Your Child’s education
- Their Marriage
- Your Retirement
- Yearly Vacations
- Other contingencies
You can consider your ‘Why” as your financial goals. Once you know why you are saving, also choose your priorities. If you are just starting your savings, you cannot save for all these expenses right away with a limited monthly income. So, know for sure which is the most important expenditure for you.
2. Your Income and Expenditure
You cannot decide to save an amount if it causes you financial stress. So, save according to your income, and your monthly expenditure.
Savings = Income - Expenditure
At the same time, don’t go for a rough expenditure figure. If you are not aware of your expenditure, consider calculating your monthly expenditure for a month. That said, record every expenditure, and come to a figure. The money you will be saving, a portion of it would go towards your saving funds. So, determine, what can be the approximate number you can contribute towards your savings.
A pro tip: Controlling your spending habits would go a long way towards helping you save more – both for the present and the future.
3. Research About the Savings Schemes You Can Invest Your Money in
When you are using a savings calculator, some calculators require you to fill out your savings or investment plan. So, before using a calculator, you have to know which plan you are choosing.
Having said that, you don’t have to depend on your savings account to hold all your savings. Fortunately, there is a myriad of saving schemes in India that can help you grow your savings exponentially by providing you a return or interest.
Additionally, you can invest your money in the best investment options formulated by insurance and financial institutions. Some of these schemes offer guaranteed income or money back along with some bonuses against regular premium payments made by you. You can use an investment calculator to know how much to invest to meet your financial goals.
4. The Annual Interest Rate
A savings calculator has an annual interest rate field. It is the approximate interest rate you are expecting on your savings. As different savings and investment schemes have different interest and return rates, they can go on from 1% to 15%, depending on the scheme you choose. Thus, when you are using a savings calculator, do not go for a random figure as it can give you an inaccurate result which might only cause problems for you later.
If you are not sure about the rate, you can seek the help of a financial planner. They can guide you better and find the best investment and savings options for you.
Some Benefits of Using a Savings and Investment Calculator
Using both, a savings and investment calculator comes with many benefits
- Aids financial planning
- Gives you a better idea about how much to save and how much to invest.
- Helps choose the most suitable investment options for you.
- Helps you have a systematic approach towards savings and investment.
- Helps create multiple reserves categorically.
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