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How to Use a Calculator

A calculator is the best way to calculate your present and future finances beforehand and make an informed decision. Whether you are searching for a loan, locking into a mortgage or thinking of an investment, a calculator can prove to be your advisor and personal assistant! When you are thinking about anything where a handful of cash is involved, it is always a good idea to use a calculator for planning and sizing your resources in advance.

Nowadays, there are dozens of calculators available that can produce customized and personalized results for any financial need you have. Whether it is about investment opportunities, loans, retirement planning, mortgage calculations or even debt management – there is a calculator available for all your needs!

But the question here is – how exactly can you use a calculator to compute your financial standings and situations and assess the feasibility of a particular financial venture? Does it really work and is it a difficult procedure?

It is a common perception that using a calculator is tricky and confusing and should be left to financial experts only. However, with the right knowledge and some basic guidelines, you can use a calculator to your advantage quite easily and manage any financial risks or considerations in due time!

Want to know how a calculator works? Here is a list of general guidelines that are common for almost all simple and advanced calculators. Take a look:

Decide What You Are Looking For

Before you start using or even searching for a calculator, the starting point for you should be the exact value that you are looking for. For example, if you wish to use a calculator to find out what your monthly mortgage payments will be, you first need to decide whether you are going for a fixed rate mortgage or a variable mortgage etc.

Similarly, a calculator will usually differ on the basis of the type of mortgage you wish to lock in and the frequency of payments that you will make. The interest and term etc can be changed on a calculator accordingly and you can use different values to find what will be the effect of a particular term and rate on the mortgage amount you wish to borrow.

Therefore, before you start using a calculator, it is important to do a little market research and find out about the different variants and types of financial options out there that you can qualify for. Then, use these values to calculate the final results using a calculator and you will be all set to secure your future financial situation!

Collect Complete Information Beforehand

Jot down all your financial details, like your savings, income and overall expenses before you start using a calculator to evaluate the required financial information. Once you have all the parameters in check, you can start entering the values in a calculator to find out the information that you need! There are a bunch of helpful financial calculators available that not only help you find out about your financial status but also help you in saving and budgeting in a smart way!

Learn About the Basic Parameters

Though some advanced and more sophisticated calculators have additional fields for more detailed results, the basic parameters in a calculator are same for most financial options. Most financial calculators come with the same set of requirements, with a little addition or deduction as per requirement.

For example, whether you are going for a mortgage, calculating your debt ratio or searching for a perfect loan payment plan for you, some of the main parameters that you will need are as follows. However, keep in mind that you may not need all these parameters in all types of calculators, and some additional information like amortization or term etc may be required in some cases.

  • The principal loan amount or present value of the loan. This is actually the amount of loan that you need and are using a calculator for calculating the payments for.
  • The interest rate that you are locking in.
  • The number of payments
  • The payment amount
  • The future value of the loan

By a general rule of thumb, if you know about any four out of these five options, you can calculate the fifth one using a calculator! And that too in just a few keystrokes!

Enter all the Known Values in the Calculator Accurately

Most financial, business or even scientific calculators come with examples, definitions, drop down menus and helping guides etc that describe what value should be entered in the required fields of a calculator. Read the details carefully and then enter all the known values in the correct fields.

Another point to have in mind is that a lot of calculators differ on the basis of country, region or state. Use a calculator that pertains to your location and requirements so that you can be assured of the final details being completely accurate and according to your needs.

Once you have entered all the details in the required fields of a calculator, click on the ‘calculate’ button to find out the results! A calculator not only provides you a result summary, but often shows graphical data and illustrations for more detailed insight.

Aside from the basic entities like mortgages, loan and debt etc that are usually evaluated through a calculator, there are tons of other options as well that can take your budgeting and financial planning to an entirely new level and help you ascertain your present and future in a more balanced light.

For example, you can use a calculator to find out about your life insurance, future financial status, whether you are eligible for a student loan or not and what would be the total cash flow for your business etc.

The main trick of using a calculator in the right way is to go through all the details carefully and enter appropriate and accurate values. With a calculator by your side, you can be your own financial planner and reduce the risks of any hasty decisions or major losses down the road! Good luck!

 

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