My Money Skills | Budgeting and Savings

Principles of Saving


		Interest Calculations		The Rule of 72
		The Power of RM50 a Month		Start Saving Early

Interest Calculations


	Input your own values in the formula below to calculate the simple and compound interest you will get.


	Simple Interest Calculation Dollar Amount x Interest Rate x Length Of Time (in years) = Amount Earned

If you had RM in a savings account that paid % simple interest, during the first year you would earn RM in interest.

The account would continue to grow at a rate of RM per year, despite the accumulated interest.

At the end of years you would have earned RM.

Compound Interest Calculation
Interest is paid on original amount of deposit, plus any interest earned.
(Original RM Amount + Earned Interest) x Interest Rate x Length Of Time = Amount Earned

If you had RM in a savings account that paid % interest compounded annually, the first year you would earn RM in interest.

At the end of years, you would have earned RM in compound interest.

The Rule of 72
The rule of 72 helps to determine how many years it will take to double your money. Input your own value in the formula below.

You can also use it to determine what interest rate you need to double your money in a set amount of years. Input your own value in the formula below.

The Power of RM50 a Month
Paying down your credit card bills can give you real "savings". Paying the minimum due each month can be deceiving.

An example of what RM50 can do
If you have a credit card with a RM3,000 balance at an annual interest rate of 18%, and pay only the 2% minimum monthly payment of RM60 per month, it would take you eight years to pay off your bill without any additional purchases made on your card. Think about that before you HAVE to BUY that item!

By the way, that RM60 payment for eight years means you paid in RM5,780, not the RM3,000 you thought the item or items cost. You would have paid almost twice the original debt over the eight-year period.

Now, here's a great idea idea to save your money. If you pay an additional RM50 per month on that debt, for a total payment of RM110 a month, you would pay off the debt in three years and save over RM1,800 in interest payments.

So, RM50 a month can be quite powerful! Imagine what you could do with RM100 more per month.

Read more on interest calculations

Start Saving Early
Mary and Jim both save RM1,000 per year (RM83.33 per month or RM19.23 per week). The money each saves earns 10% interest per year. Mary starts at age 22 and stops at age 30. Jim starts eight years later at age 30 and stops at age 65*.

Age	Mary Invests	Growth (10% per year)	Jim Invests	Growth (10% per year)
22	1,000	1,100	0	0
23	1,000	2,310	0	0
24	1,000	3,641	0	0
25	1,000	5,105	0	0
26	1,000	6,716	0	0
27	1,000	8,487	0	0
28	1,000	10,436	0	0
29	1,000	12,579	0	0
30	0	13,837	1,000	1,100
31	0	15,221	1,000	2,310
32	0	16,743	1,000	3,641
33	0	18,418	1,000	5,105
34	0	20,259	1,000	6,716
35	0	22,285	1,000	8,487
36	0	24,514	1,000	10,436
37	0	26,965	1,000	12,579
38	0	29,662	1,000	14,937
39	0	32,628	1,000	17,531
40	0	35,891	1,000	20,384
41	0	39,480	1,000	23,523
42	0	43,428	1,000	26,975
43	0	47,771	1,000	30,772
44	0	52,548	1,000	34,950
45	0	57,802	1,000	39,545
46	0	63,583	1,000	44,599
47	0	69,941	1,000	50,159
48	0	76,935	1,000	56,275
49	0	84,628	1,000	63,002
50	0	93,091	1,000	70,403
51	0	102,400	1,000	78,548
52	0	112,640	1,000	87,497
53	0	123,904	1,000	97,347
54	0	136,295	1,000	108,182
55	0	149,924	1,000	120,100
56	0	164,917	1,000	133,210
57	0	181,409	1,000	147,631
58	0	199,549	1,000	163,494
59	0	219,504	1,000	180,943
60	0	241,455	1,000	200,138
61	0	265,600	1,000	221,252
62	0	292,160	1,000	244,477
63	0	321,376	1,000	270,024
64	0	353,514	1,000	298,127
65	0	388,865	1,000	329,039
	Value at Retirement	RM388,865	Value at Retirement	RM329,039
	Less Total Contributions	RM(8,000)	Less Total Contributions	RM(35,000)
	Net Earnings	RM380,865	Net Earnings	RM294,039

Mary invested RM8,000 total
Jim invested RM35,000 total

* and Jim never caught up.


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