Savings Account Calculator: A Definition of Variables
Barb Anderson

Defined Tag: Savings Account Calculator.

A number of savings account calculators exist in order to estimate how much a certain amount of money can be earned by placing it in a savings or investment account. There are many factors that can be variable with a savings account calculator.

The first variable that needs to described in a savings account calculator is how much money will be invested including the starting amount and any additional contributions over time. The starting amount or starting balance entered in a savings account calculator describes the amount first invested or saved. Additional contributions describe the amount of money that is planned to be added to the savings account per period of time. Savings account calculators that use additional contributions as an option when calculating the final amount of money earned typically assume that the additional contributions will be added at the beginning of the stated period.

The second variable that needs to be defined when using a savings account calculator is the amount of time, whether that be in the number of years or the number of months that the investment will be earning interest in the account.

The third variable of interest when using a savings account calculator is the rate of return. Each investment or savings account has a particular annual rate of return associated with it.

A fourth variable that may be included in a savings account calculator is the compounding. Compounding refers to the earnings on an investment's earnings in addition to the interest previously earned. Knowing the rate of compounding is important when using a savings account calculator because it helps predict with accuracy how much interest will be gained over a given amount of time.

Using a savings account calculator can be a helpful tool when comparing rates of different financial institutions to find the maximum output for one’s contributions.

Barb Anderson has edited or written numerous articles for family-oriented ezines and sites on the worldwide web. Barb is Editor of the Power Learning Tips and Tricks newsletter, which is available at:   http://MastermindLearningSystem.com.