How to Do Your Own Simple Financial Calculations for Free

The favored financial software here at Prosperity Thinkers is the Truth Concepts calculator suite. Full disclosure, the creator of the calculators is my (Kim’s) husband, Todd Langford. However, one of the many benefits of being close to the source is that I know how much work and principle goes into these calculators to make them powerful, accurate, and most importantly compatible with life insurance illustrations!

The reason I bring up Truth Concepts today is that there is now the capability for ANYONE to access certain features of Truth Concepts for free, permanently. Until recently, anyone has been able to download a free trial of the full calculator suite. Todd has offered this because he believes it’s essential for prospective buyers to feel confident and because clients should have the ability to see the software their advisors are using. This layer of transparency can help people go into a major financial decision a little more confidently.

So what’s changed? Well, now you also have the option to keep the five simple Financial Calculators, as well as the IRR (internal rate of return) Calculator on your computer for personal use, no purchase necessary. We at Prosperity Thinkers believe that this is a huge benefit to ANYONE, and we’ll show you why, with examples of how you can use the Financial Calculators in your daily life.

What are the 5 Financial Calculators?

The 5 financial calculators are reciprocal with one another, and are based on the 5 major financial variables: present asset value, future asset value, interest rate, time period, and cash flow (i.e. payment into account or withdrawal from account). Each of the five calculators helps you determine one of those variables, while the remaining four variables are used to make the calculation. 

Think about it: if you want to find the interest rate of something, what information do you need? You would need to know:

  • How much the account grows—from now (Present Value) to the future (Future Value)
  • How long you’re measuring the growth—is the time period a year, 180 months, 2 quarters?
  • Are there any withdrawals or payments to the account? 

Or, if you want to know how long it would take to save $100,000 you would need to know:

  • How much do you already have? (Present Value)
  • How much will you be putting away, and how often?
  • What is your account earning in interest?
  • What is your target savings? (Future Value)

As you can see, these variables are intrinsically connected. There’s a wealth of knowledge (no pun intended) to gain just by having access to these small yet mighty calculators. To show you just how potent they can be, let’s discuss some examples of how you might use each of the 5 financial calculators.

How to Do Your Own Simple Financial Calculations with the Five Financial Calculators

Future Value Calculator

The Future Value Calculator allows you to calculate what an account will be based on your current actions. We frequently use Future Value to show the time value of money—the potential of a sum over time when interest is applied. 

The time value of money can show you how much money you can accumulate, yet that’s not all. With Future Value, you can also demonstrate opportunity cost, or how much money you could be missing out on. While it’s functionally the same calculation, the context is critically different. 

For example, let’s say you spend $1,000 in cash on a spur-of-the-moment purchase. You might think there’s no hidden cost there, yet there is an opportunity cost. If you chose not to make that purchase and instead put that money into an account earning 5%, in ten years you could have $1,629. In 30 years, you could have $4,322. 

While you might not feel that loss if you simply spend the money, you lose the opportunity to ever earn those same dollars again. Sure, you might get $1,000 you can save later, though you’ll never get that time back, or what that time would have done for you. 

Present Value Calculator

The Present Value Calculator is a way to “reverse engineer” your objectives. Commonly, we use Present Value to do inflation calculations. For example, let’s imagine what inflation will do to someone with an income of $150,000 in 30 years. 

Start by putting $150k into the Future Value box. The reason you put it into Future Value is because you’re imagining that this would be your income in the future. Leave payments/withdrawals at 0, and add an inflation rate. For this example, we’ll use 3.5%, which was the average rate for the last 12 months. Then, add your 30 years. The result is a Present Value of $53,442.

That means that 30 years from now, $150k will have the spending power that $53k has today. (Of course, this is only a projection, since inflation fluctuates. However, much wiser to prepare accordingly.)

This isn’t just for income, either. You can use Present Value to see how inflation can affect all kinds of sums such as your mortgage, your savings account, or even your life insurance premiums.

Payment Calculator

The Payment Calculator can come in handy when you’re shopping for something that you’re going to finance. For example, if you’re in the market for a car, you can plug and play numbers to see what your payments might be depending on the cost of the car, the length of the loan, and the interest rate you get. 

Here’s what a potential loan could look like if you’re buying a $30,000 car. 

You can make adjustments as you see fit, like making the loan term longer or increasing/decreasing the interest rate. Note that we also changed the time period from Annual to Monthly to calculate a monthly loan payment. 

One of our most common demonstrations with the Payment Calculator is showing people how 0% financing isn’t actually 0%. This is a powerful example of how you can use the calculator to your benefit.

Rate Calculator

The Rate Calculator has more applications than you might think. In addition to helping you determine or remember what your interest rate is on an account, the Rate Calculator can also help you identify a rate of return. 

For example, many people mistakenly think that if the bank pays you 1% on your money and then loans your money to someone else at 3% that it’s a 2% INCREASE. In reality, it’s only a 2% spread, while the increase is actually 200%. 

Think of it this way: 100% of 1 is 1. So if you go from 1 to 2, the value has increased by 100% of the original value. If you do it again, you’ve increased by 200% of the original value. 

In addition to simply determining RORs, you can also use the Rate Calculator to find your interest rate if you don’t know or remember. For example, you can plug in your credit card balance, payments, etc to determine what rate you’re being charged. Here’s what the car purchase from the Payment Calculator would look like if you were solving for the interest rate instead of the payment.

Time Period Calculator

The Time Period Calculator is what it sounds like—it can tell you how long it will take you to accomplish something. Common uses could be to figure out how long it will take you to accomplish your savings objective based on what you’re doing now, or how much longer you have to pay down a loan. 

Here’s an example of what it would look like if you’re trying to figure out how much longer you have on your mortgage.

Get the 5 Financial Calculators

As you can see, the 5 financial calculators can pack a powerful punch, and there are many ways to use them. Just these few calculators can help you work through conceptual stumbling blocks, fine-tune your financial strategies, and so much more. 

To get access to these calculators, you can sign up for a free 30-day trial of Truth Concepts. By doing so, you’ll get access to the entire software suite for your trial period. This includes our larger, more specialized calculators. Then, when your 30-day license is up, instead of paying to renew, you can simply hit “Continue” on the Registration window that pops up when you open the software. Doing so will disable everything except for these 5 financial calculators, as well as the IRR Calculator (Internal Rate of Return), for your personal use.

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