FreeFinance

Savings Calculator

Compound interest is the closest thing to a superpower a student has — because time is on your side. Enter your starting balance, monthly contribution, expected annual return and time horizon, and see exactly what your savings become — plus how much of that growth is pure interest.

Starting balance

Monthly contribution

Annual return

Expected yearly rate

Time horizon

yrs

Future value

8,325.85

7,000 contributed · 1,325.85 earned as interest

Future value: 8,325.85
Contributed: 7,000
Interest: 1,325.85

Methodology: monthly compounding applies the monthly rate (annual ÷ 12) each month with monthly contributions. Yearly compounding applies the annual rate once per year with contributions deposited monthly. Projections are estimates — returns are never guaranteed.

How it works

Enter your starting balance (even $50 counts).
Enter how much you can save per month.
Set the expected annual return and how long you'll save.
Choose monthly or yearly compounding.
Results: future value, total contributed, and interest earned — the honest “money made from money” figure.

The formula

Future value (monthly compounding)

FV = P₀·(1+r)^n + M·[((1+r)^n − 1) ÷ r]

P₀ = initial balance, M = monthly contribution, r = monthly rate, n = months. Contributions earn interest from the month they're deposited.

Worked example

Start with $1,000; save $100/month; earn 6%/year; 5 years, monthly compounding
r = 0.005, n = 60
FV = 1000·(1.005)⁶⁰ + 100·((1.005⁶⁰−1)/0.005)

Future value ≈ $8,326 — you contributed $7,000 and the remaining ~$1,326 is compound interest. Free money, earned by starting early.

Common mistakes

Waiting for a “big enough” income to start saving — $50/month at 6% becomes ~$8,300 in 10 years.
Using the nominal rate instead of what the account actually pays after fees and tax.
Ignoring inflation — a 6% return with 4% inflation is really ~2% growth in purchasing power.

Frequently asked questions

How much interest does $100 a month earn?

At 6% annual with monthly compounding, $100/month for 5 years earns about $326 in interest; over 20 years it's roughly $20,000 on $24,000 contributed. Time matters more than the amount.

Monthly or yearly compounding — which is better?

Monthly compounding earns slightly more because interest starts earning interest sooner. The difference is small, but the calculator lets you compare both.

Is the calculator a guarantee?

No — returns are never guaranteed. Use it to model scenarios, and treat any projected return as an estimate.

Should students invest or keep cash?

Rule of thumb: keep 1–3 months of expenses as an emergency fund in cash, then consider low-cost index funds for longer horizons. Not financial advice — do your own research.