Advance financial planning is essential to ensure that you’re able to meet your life goals. This could include your children’s education, purchase of a home, or even retirement. By creating a solid financial plan, you can define your goals and balance income, expenses and investments to reach these landmarks faster. The financial plan is a step-by-step guide using which you can build a secure future.

How do you create a financial plan?

The first step is to identify your goals. When your child turns eighteen, do you want a lump sum for their higher education? Do you need a monthly pension from when you turn sixty? Once you’ve defined the time at which you need the investment to mature, you can use an investment calculator to ensure that you will receive the right amount at the right time.

What is a financial calculator?

You know your disposable income, the amount you need to fulfill your goals, and the time you have available. With this information, you can learn the rate of return that you require with an online financial calculator. Many free online financial calculators are available, using which you can understand your requirements better.

This online tool can calculate any of the financial plan parameters – principal, rate of return, final amount and duration. When you have three of the parameters, it’s easy to calculate the final one using a financial calculator.


If you know the amount you need to achieve your financial goal, you need the below formula:

FV = PV(1+R)^N

(FV: Future Value

PV: Present Value

R: Inflation Rate

N: Duration of investment)

Let’s say you want USD 20,000 in 10 years, and expected inflation is 5% – the calculator would work as below:

PV = USD 20,000 | R = 5% | N = 10

FV = 20,000(1+0.05)^10 = USD 32,578

That means you have ten years to save around USD 33,000. If you have a particular investment opportunity with a 6% rate of return, using the financial calculator, you can identify that the annual investment required would be USD 2,472. 

Once you’ve calculated the monthly or annual amount needed, you can compare it with your available disposable income and make lifestyle changes to reduce expenses and increase investment.

Do investors really use online financial calculators?

Of course, not every investor uses a tool of this nature, but there are real benefits to using a financial calculator or planner. That is why many businesses in the industry provide such tools via their websites or mobile applications.

An effective financial calculator accounts for inflation, tax implications and shares multiple investment opportunities and options with the benefits and outcomes.

Benefits of using a financial planning calculator 

1. Understand how much to save each month or year

2. Estimate the growth of your investments 

3. Know and plan when the investment will mature

4. Identify and track income tax and other financial benefits

5. Account for inflation and other factors that may be missed when making manual calculations

6. Make informed investment decisions with complete transparency and awareness of how much you have available to invest, where else you can cut down on your budget, and the future value of your goal

How to achieve your goals 

Step 1: Know your goals and the future value of each amount required

Step 2: Use a financial calculator to identify the monthly amount to be invested

Step 3: Diversify your asset base to get the right mix of lumpsum and monthly payouts

Step 4: Start saving now, and save tax wherever possible 

Using a financial planning calculator, you can address and avoid the major investor pitfalls of procrastination, lack of awareness and overconfidence. A good financial calculator gives you all the information on tax-saving benefits, multiple options, the amount to invest, and inflation factors. By using a planning tool, you can make better choices and thus create a greater corpus to achieve your goals faster and more effectively.

If you are a plan provider looking for ways to deliver greater value to your participants, financial planning calculators are a great idea. For more ways in which you can improve Customer Experience across the entire retirement plan management lifecycle, do get in touch with us today.

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