# 3.1.8 A savings calculator

How fast can you save towards a goal? Try the Financial Goal Calculator to see how your savings will grow when you make a regular contribution to a savings plan.

Here's an example: Suppose Jennifer has \$250 in her savings account on January 25, 2017. She is thinking of buying a house in the future and would like to be able to save up \$10,000. She decides she can have her bank make an automatic transfer of \$250 every month to her savings account. How long will it take her to reach her savings goal with an interest rate of 4%? Inputting her information into the calculator, she finds that in only 3 years she can attain her goal.

[Source: Screenshot from the Financial Goal Calculator]

## The Rule of 72

If you don't have a calculator, the Rule of 72 gives you a quick way to see how your money grows with compound interest.

• Divide the rate of interest into 72 to see how many years it will take to double your money.

For example:

• At 10% interest, your money will double in 7.2 years (72 ÷ 10)
• At 4% interest, your money will double in 18 years (72 ÷ 4).
• You can reverse this: divide 72 by the number of years to see what interest rate you need to double your money.

For example:

• To double your money in 20 years, you need to earn 3.6 percent interest (72 ÷ 20).
• To double your money in five years, you need to earn 14.4 percent interest (72 ÷ 5).

The difference in the amount of interest paid may appear to be small, but over time it can amount to a lot more savings. The key is to start saving as soon as possible.

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