If you have read my previous post about setting SMART financial goals, you may need a way to calculate the future value of money.

For example, you want to save enough money for your child’s education in 15 years time. How do you know how much to save?

I have written a simple future value calculator based on the future value formula:

FV = PV(1+i)

^{n}Where:

FV= Future value of moneyPV= Present value of moneyi= Percentage of interest per periodn= Period (years or months)

Now, don’t get too worried about the math. Future value of money is the future value of the money you have today.

To calculate future value, we normally use an estimated annual inflation rate in the *i* column.

If you want to use this calculator to estimate compounded return of investment, you would put the expected annual returns in the *i* column.

There are quite a few methods for future value calculations, but I find this the simplest.

### Future Value Calculator

Present value of money Interest per period (%) Period (years or months) Future value

Warning: Using this calculator can cause stressful and sleepless nights. I bet you didn’t know you needed so much money!

If you wanted to estimate how much your child’s education will cost, you will put in a present value based on the current education cost.

Let’s say a local college degree will cost RM35000 per year. Multiply by three years and you will get RM105000.

Let’s put in a conservative inflation rate of 4.5%, and assume we have 15 years before your child finishes secondary school.

Using the calculator you will see that you need to accumulate RM203,204!

### Spreadsheet FV Function

If you are using a spreadsheet program, you can use the FV function to achieve the same.

The Microsoft Excel Future Value Calculation formula is:

=FV(i, n, pmt, PV)

Where:

i= Percentage of interest per periodn= Period (years or months)pmt= Fixed payment amount. Use zero for future value.PV= Present value of money

### Conclusion

I hope this can help you in your financial planning.

As I have mentioned, you can really get worried looking at the huge numbers.

Don’t worry too much. You should be fine if your savings and investments give you returns that beat the inflation rate.

**Note**: You are free to embed this calculator on your website as long as you retain a link back to this web page.

Just copy and paste the script below:

Memang stressful..

Adino: Yeah hahaYou are so smart to calculate even though you are not trained in Accounting, i believe

Adino: I learned it from reading personal finance books.How to do it in excel?

Adino: You can use the function I mentioned in my post.I don’t know if this is your forte, or if you know who could answer this but any help is greatly appreciated. I have a question about this Income Statement: How would I find a Deprecation Expense w/a Tax Rate of 35%:

Net Sales: $11250000

COGS (Less): -7750000

Gross Profits: 3500000

EBIT:

Interest (Less): 850000

EBT:

Taxes (Less):

Net Income: 1495000

Pref.Stock Dividends: 495000

Additional R.E.: 1000000

I know I can find my EBIT or EBT w/o my Deprecation Expense, and I’m pulling my hair out trying to work this out, Please help!

Adino: Sorry I can’t help you here.OK, this has given me a headache. I’ll stick to counting chickens thank you very much! ðŸ˜›

Adino: Haha it gives me a headache, and sleepless nights too!what is pmt???-fixed payment amount

Adino: This is the regular payment amount that you will add.Example, if you have RM10000 now, and you want to see how much you will have in 10 years, assuming 4.5% interest per annum, and each year you will add RM2000:

Thanks adino. Got it now

Adino: No problem. Happy calculating!Dear Adino,

Need to know how can a person calculte FV using the calulator alone.

Adino: Hi Nazma, sorry I can’t help you. Normally you need to get a special financial calculator.I don’t know the formula to calculate using a normal calculator, but if I was to try, I would just keep multiplying my starting amount over and over again.

For example, if RM100 today with 4% increment over 10 years. I will use 100 X 1.04. Then repeat 10 times.