These money calculators can help simplify your financial life

Money calculators you need to simplify your financial life

“Do the math.” It’s one of my favorite phrases in personal finance, whether we’re talking about paying off debt or saving for retirement. That’s because once you run the numbers, you understand in real terms exactly how much money you can save by making sound financial decisions. Doing the math explains why certain counterintuitive moves—say, using some cash to pay down a high-rate credit card rather than keeping it in a low-rate savings account—make sense.

That’s why I love online money calculators. Yes, I said it. And it’s true.

These evolving, usually free tools can help you understand where your money is going, how much you need to save to get something you want, or how long it’ll take you to get out of debt. I am such a fan of money calculators that I have a whole section of them on thanks to Karl Ebert—a pioneer in the field whose calculators can also be found on the sites of major financial institutions. When the Minneapolis-based programmer started designing money calculators in the late 1990s, he said, features like responsive design for mobile devices or the ability to save your results were years away. But Ebert has tweaked them every year as details like IRA and 401(k) borrowing limits change, inflation rates fluctuate, and Congress reforms laws governing taxes and retirement saving.

“It’s a lot of work, but it’s exciting in a strange way,” said Ebert, who maintains more than 400 calculators across the internet. “People like them because they’re up to date, easy to understand, and they can be used over and over. The results are more than just a number—they include an explanation for how you got there.”

I live and die by these babies. But recently, a smart friend admitted she’s never used one. So I thought it was time for a quick primer to let her—and everyone—know what’s out there. One warning: Not all online calculators are created equal. And that’s why I’ve included links to some of my favorites below.

When will I be able to buy it?

There’s always a reason to save. You need a washer-dryer, a new roof, or a special anniversary gift—the kinds of things many people go into to debt to pay for.

The best way to accomplish these goals is to send money to a savings account automatically, either by setting up recurring transfers from your checking account or direct deposits of a portion of your paycheck. (It’s hard to miss money you never really see, right?) But to home in on how long it will take to get there—and how much you’ll need to sock away—your best bet is this savings goal calculator, which allows you to work backward to calculate how long you need to save to reach a certain amount—and how much to save each month. (You can even pinpoint a future date on the calendar to celebrate.)

If you’re more interested in how savings grow in general (as opposed to working toward a specific goal), try this compound interest calculator to assess the impact of your overall saving strategy. (Again: Automate!) This calculator shows the benefits of small savings behaviors. For instance: Let’s say you have $500 in an index fund earning 7% interest. Leave it untouched and, ten years later, you’ll have nearly double that amount. Not bad. But save an extra $20 a month over that decade—$2,400 in total contributions—and you’ll end up with $4,500.

Where does my paycheck disappear to each month?

This detailed calculator will have you thinking more carefully about where your hard-earned money is going each month. I’m not saying you need to live according to a tight budget forever. But if you’re spending more than you’re making, this home budget calculator will help you pinpoint areas where you may be able to cut back (such as dining out, shopping, and subscriptions). I’m not a big believer in budgets in general, but it’s important to be mindful of where your money is going if you’re looking to make spending adjustments.

Should I buy or rent a home?

Housing is one of our biggest expenses. But determining whether you should keep renting or take the plunge and become a homeowner requires more than simply comparing your monthly rent with a mortgage payment. Fees, insurance, taxes, closing costs, and the appreciation of property value are among the many complications. This rent vs. buy calculator considers all these factors and estimates how many years it will take for your home purchase to break even. If you’re not planning to stay that long in one place, it often makes sense to keep renting.

How’s my 401(k) doing?

Money calculators really shine when showing how compound interest can juice up your retirement savings. This 401(k) calculator is perfect for a regular retirement savings checkup. You put in your contribution rate, how much of it your employer matches, how long you plan to work, and so on, and then get a number showing how set up you’ll be decades from now—or get a wakeup call if you aren’t saving enough. There are other calculators built for specific scenarios: planning a traditional IRA, planning a Roth IRA, choosing between a Roth IRA and a traditional IRA, and choosing between a Roth 401(k) and a traditional 401(k). These are all “retirement accumulation” calculators. In the past few years, Ebert said, as Baby Boomers have begun to retire, increasing numbers of users are searching for “retirement distribution” calculators (like this one) to figure out their retirement account withdrawal strategy.

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