Step 1: Accumulate Wealth

What is it? If you want to know how long it takes to double your money, take the number 72 and divide it by the interest rate that you are getting or would like to get. For example, deposit an amount of $3,000 into the bank at an interest rate of 8% and you will have accumulated $6,000 at the end of 9 years, 72 / 8 = 9. A certain sum of money will double in 14.4 years with an interest rate of 5%, 72 / 5 = 14.4 Money will also double in 6 years at an interest rate of 12%, 72 / 12 = 6.

This can be proven by using our Savings Calculator and inputting the above numbers.

Consistent savings over a number of years can accumulate great wealth. Compound interest makes it add up a little faster than by compounding annually. You can view the differences on the calculator by inputting the various compound frequencies, such as: compound monthly, quarterly and even daily.

• Even small additions to your savings add up over time.
• You may start with an initial deposit and then add to it on a monthly, quarterly, or yearly basis.

You can prove the Rule of 72 by using this calculator. Start by putting a dollar amount in the Starting Amount box, then leave the Additional Contributions box blank and input an interest rate and the number of years which is 72 divided by the rate of interest that you chose.

Make sure to study the illustration and refer to the definitions.

The Emergency Fund is used to meet unexpected expenses, such as, medical expenses not covered by insurance, major repairs to an auto or home, breakdown of household appliances, or loss of income due to prolonged unemployment or disability.

A good rule of thumb is that a consumer should put away three to six months worth of living expenses into an interest bearing account. This is why preparing a budget is very important as we discussed earlier. You can pick your living expenses directly from your budget. You can estimate most of the other emergencies and get the decuctibles from your insurance policies.

Our Emergency Savings Calculator does an excellent job explaning what emergency savings is and helps you determine how much you may need.

Having adequate emergency savings can make unforeseen unemployment, auto repairs, medical emergencies, property damage and even legal issues more manageable. With adequate emergency savings, you can focus on how to best meet your family's needs, rather than worrying about finding the money to handle these difficult situations. This calculator helps you determine how much emergency savings you may need, and how you can begin saving toward this important goal.

Please study the illustration and read the definitions.