4 Lesser-Known Benefits of Using Online Calculators for Financial Planning
Written by
Preston Hartwick
Edited by
Gary Dudak
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Most people can’t do compound interest calculations in their head. But understanding exactly how quickly your money is growing (or shrinking) over time is crucial when you’re developing your financial strategy.
Instead of trying to work out the calculations yourself with a pen and paper, try these free, easy-to-use online calculators for figuring out everything from mortgage payments to retirement savings.
Free Online Financial Planning Calculators
- Mortgage Calculator: This calculator has everything you need to figure out the best mortgage rate or how much you’ll pay in interest over time. It even allows you to compare loan types so that you can make the best decision when shopping around.
- Auto Loan Calculator: This calculator allows you to input important factors like cash incentives, trade-in value, or state sales tax. It even shows you the amortization schedule so that you can understand the ratio of interest to principal balance payments over time.
- Student Loan Calculator: This calculator offers three modes to help you calculate simple monthly payments or create projections based on different repayment scenarios. Play around with different monthly payment amounts and loan terms to understand how you can save money on interest over the long run.
- Retirement Calculator: Plan for retirement by calculating how much you need to save based on your current income. You can also calculate how long your current savings will last and how much you can withdraw after retirement.
- Debt Payoff Calculator: If you have multiple debts, use this calculator to determine the most efficient payoff sequence based on interest rates.
- Net Worth Calculator: Use this calculator to figure out how much you have in total assets. It’s important to understand where you stand so that you can make more informed decisions for your financial future.
4 Benefits of Using Online Calculators for Financial Planning
1. Visualize Different Repayment Scenarios
Using a calculator to compare different mortgages or student loan repayment plans can save you a lot of money over time by highlighting the total cost of each scenario. This helps you avoid making short-term decisions that may result in larger debts down the road.
Example: Imagine you’re planning to buy a home and can take out either a 30-year mortgage at 5% interest or a 15-year mortgage at 4.5% interest. While you would need to make higher monthly payments for the 15-year mortgage, you would save $50,000 in total interest compared to the 30-year plan.
2. Evaluate Leasing vs. Buying
When you’re buying or leasing an asset that involves many years of loan payments, it can be challenging to compare all of the included costs without using a specialized calculator. Financial calculators include factors like depreciation and interest to help you make an informed decision.
Example: If you buy a $30,000 car on a five-year loan at 4% interest, you would pay around $600 per month and $36,000 in total. In contrast, leasing the same car for three years at $400 per month means you would pay a total of $14,400. In the end, buying is more expensive, but you have ownership of an asset that you can sell later on.
3. Calculate Benefits From Extra Payments
It can be tempting to simply pay the minimum amount toward your debts, but increasing your payments is a sure-fire way to save money overall. Use a debt calculator to learn more about how repayment amounts affect your total debt bill.
Example: A fresh graduate has a $20,000 student loan at 6% interest. They use a student loan calculator to learn that adding $100 to their monthly payments reduces the total interest by $2,000 and pays off the loan two years earlier than expected.
4. Facilitate Better Financial Decision-Making
Using a net worth calculator gives you a clearer picture of your overall financial standing so that you can make informed decisions about your future. You should take this information into account whenever deciding how to save or pay off debts.
Example: Someone considering a mid-life career change might wonder how this will affect their future financial situation. They can use financial calculators to create various projections based on salary changes and variations in living expenses due to a new lifestyle or change in location.
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