Understanding the intricate complexities of your personal and professional finances can be remarkably challenging at the best of times. With so many figures, technical terms, and complicated formulas, it can be very easy to get lost in all the numbers and what they could all mean. Rather than trying to work out all the numbers by hand using a pen and a pad of paper, or even creating your own complicated spreadsheet, it is far easier and more efficient to utilize an online calculator to arrive at the answers you seek.
Savings and Investments
Your finances can effectively be broken down into one of two categories. On the one hand, you have money that is coming in or money that you already have. These assets can take on the form of cash you have in your bank or investment accounts. It is important to quantify not only how much you have in savings right now, but also what your savings will look like 5, 10 or even 50 years from now. Relevant questions you might ask yourself include the following:
- How much money do I need to save for my retirement? Several factors can impact your 'magic number' for retirement, including your expected cost of living, how much you already have saved, how many years you have until you plan to retire, and so on.
- If I set aside $100 every month, how much money will I have saved 20 years from now? This can be related to your retirement or to any other financial goals you may have. You can see the impact an extra $10, $20, or $100 each month might make if you keep saving over the long term.
- What was $500 in 1990 worth in today's dollars? Inflation dramatically affects the buying power of a dollar over time. An inflation calculator can calculate the equivalent value across time, whether you're looking into the past or predicting the future.
Loans and Expenses
While you have money coming in (and money you already have) on one side of the financial picture, the other side is represented by the money you are spending or that you owe. To this end, some questions you may have include the following:
- How much can I borrow for my mortgage? When you are ready to buy your first home, it's a good idea to get a strong grasp of your potential budget, including an estimate of how big of a mortgage you may qualify for.
- What is the total cost for this car loan? A low monthly payment may seem enticing, but it is prudent to understand how much more the car loan will cost compared to paying for the entirety of the vehicle up front.
- When will I have completely paid off my student loan? Based on such factors as the size of the loan, interest rate, and monthly payment, you can determine how long will it take before your student debt is completely eliminated.
Finding Clarity in Money Matters
While online calculators and converters cannot fully replace the more comprehensive advice you may receive from an industry professional, they can provide key information to help you make wise financial decisions.