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Have you been planning to make a big purchase but haven’t been able to make it? Do you always fall short of your target and are not quite sure how to get there? Using Urban Money's savings calculator, you can estimate your savings goal or your ability to save over time. Once you enter all the details into the calculator, you will be able to know how long it will be before you achieve your goals, and the amount you need to increase your savings payments by. Let’s take a look at the Urban Money Savings Calculator, how to use it, some features, and more things you need to know.
How Does UMOceania's Savings Calculator Work?
The Urban Money Savings Calculator enables you to gain an understanding of how much you will be able to save over a given period of time. Given below is how you can use this calculator:
- Enter the initial amount you want to deposit in your account
- Enter the amount you will be depositing on a monthly basis
- Enter the interest rate you will earn on your deposit
- Enter the number of years you will invest the money
Once you have entered all the details, you will be able to see how much money you will have at the end of the savings tenure. You will also be able to see how much of the amount is interest with respect to the amount you have deposited. You will also see how the savings have grown on a yearly basis.
Benefits of Using a Savings Calculator
Given below are some of the benefits of using the savings calculator:
Aids Financial Planning
Sound financial planning goes a long way for a bright financial future. Having adequate planning can not only prepare you for your existing expenditures but also future expenses as well. It can help you develop a proper financial standing. Since a financial plan involves a careful analysis of your savings and expenses, you can know the amount of savings you can accumulate after return and interest by using a savings calculator.
Take Informed Financial Decisions
Do you want to buy a new home or a new car, but are not sure if you can manage it with your savings? A savings calculator might come in handy. For example, it can help you gauge whether you're financially strong enough to buy a new car without hampering your financial capabilities in the future. This implies you will know the amount you have to save over time if you continue to invest and deposit, you can easily determine if buying a car is a financially feasible option.
Achieve Short Term Goals
It is quite obvious that using a savings calculator can help you achieve your long-term financial goals. Did you know that it can also help you achieve your short-term goals?
For example, if you wish to plan a family vacation abroad but you are skeptical about using your existing savings for the same, using the savings calculator can help. It can help you understand how much you need to save over time to have the savings you need to plan that family vacation.
Make Investment Decisions
If you are wondering what investment option is ideal for you when your goal is to save, consider using the savings calculator. You do not have to rely on lowering your expenses to enhance your savings. You can always invest in government and private backed investment schemes to achieve the desired results.
But it is important to know that not every scheme provides the same return on investment. It is imperative to know which investment option will work in your favor. The Urban Money calculator functions by taking into account the investment option you are choosing to achieve your goal. The calculator can tell you which investment option would be ideal for you to meet your needs.
Provides Liquidity to Invest
Regardless of whether you are investing in equity or investment plans, it is not feasible unless you have the financial luxury. When you determine that you can accumulate adequate savings by using the savings calculator, you may consider using a part for investment purposes to multiply your wealth.
Helps Establish Reserves
The future may come with a lot of significant expenses- it could be your child’s education, their wedding, or your retirement. You need to account for all such expenses. Having a savings reserve can help immensely. These reserves can be considered to be retained income made to handle contingencies.
What are the Types of Savings Accounts?
Given below are the main types of savings accounts available in Australia:
Online Savings Accounts
These online savings accounts frequently provide competitive interest rates "at call" in exchange for more limited access to the account. The majority are meant to be connected to regular transaction accounts.
This account is an option for someone who wants to maximise their extra cash while earning interest while deciding how to use it. Variable interest rates may also contain an introductory bonus rate. When applying for these, it's vital to review all the information on the interest rate, any fees, and other terms (including deposit terms).
Bonus Interest Accounts
In order to encourage you to keep your money in the account, some savings accounts pay bonus interest if you meet specific conditions, such as depositing a minimum amount or refraining from making any withdrawals for a predetermined amount of time. If the interest rate incentives to save are compelling, a bonus interest account might be a suitable way to put money aside for a financial objective like saving for a vacation or down payment on a first house.
A lump sum of money is deposited in a term deposit for the duration of the chosen term at a fixed interest rate. The amount of interest earned depends on the amount of money deposited, the term chosen, the interest rate, and how the income is to be paid (annually, monthly, or at the end of the term). If the deposit conditions are met, a term deposit offers the security of knowing exactly what interest will be paid on the deposit.
Things you Should Know About Savings Calculator
The information provided by the savings target calculator should only be used as a rough reference; actual sums may vary depending on the number of calendar days in each month and any rounding.
These savings calculations are predicated on the idea that the interest rate won't fluctuate over the chosen time period, which may not be the case. Although we provide a range of interest rates, it's possible that the rate you're looking for isn't now available.
How is Interest Calculated on Savings?
Your efforts to keep your money in a savings account are rewarded with interest. In a sense, every time you make a deposit into your savings account, your financial institution is receiving a loan. They lend their customers this money to finance their enterprises or for personal and home loans. In exchange, you receive interest at a rate set by your institution. This interest is often compounded daily, which means that you receive a return on your investment plus any accrued interest. Given below is the process used by banks to calculate interest:
- The frequency of compounding is divided by the interest rate. The financial institution would divide the interest rate by 12 if it compounded monthly, for instance.
- The bank increases your divided rate by one and multiplies it by the number of interest-earning months.
- Your account balance is then multiplied by the sum.
This would be expressed as:
Final balance = principal x (1 + (interest rate ÷ compounding frequency)) time frame
For instance, your formula would be as follows if you deposited $7,500 in a savings account earning 2.5% p.a. compounded monthly over a period of ten years:
$7,500 x (1+ (0.025 ÷ 12)) 120 = $9,627.69
$7,500 - $9,627.69 equals $2,172.69 in interest overall
Frequently Asked Questions
Can you lose money in a savings account?
Yes, you can make less than the cost of your fees if you don’t shop about, even though you won’t physically lose money unless you spend it. Consider how choosing a savings account with a low base rate and hefty fees could negate whatever interest you receive, defeating the purpose of your savings strategy.
Do I need to declare the interest earned on a tax return?
Yes, you must include any interest you earn on your tax return for the applicable financial year. This applies even if your income is less than the $18,200 tax level.
Can I have multiple savings accounts?
Yes, as long as they are with different institutions, you are free to have as many savings accounts as you choose. You can have up to nine accounts with the same institution, depending on who you bank with and the kind of savings account you want to open. However, if you combine your savings into one account, you’ll get a higher rate of return.