The key to financial success is realizing the future value of every dollar you have. You have two choices: spend your money or invest and multiply it.

Scrap the financial calculator because you won’t need it to solve your financial questions. The easiest way to calculate the difference between buying and saving can be solved with Excel. List the variables you know:

PV: present value (any initially invested money’down payment)
FV: future value (target amount)
PMT: payment amount (annually)
RATE: rate of return (interest rate)
NPER: number of payments (years you plan on making payments)

When you want to solve for one of these variables, hit the function key and plug in the known variables. Note that some calculations such as payment will be negative by default. Add a negative sign after the equal sign in the formula.

**To solve MONTHLY RATES, divide RATE by 12 (gives interest rate per month) and multiply NPER by 12 (years*12=total number of months)

TRY THIS SAMPLE PROBLEM:

Small luxuries today result in huge, lost luxuries. Imagine you found $20, and you’re thinking Mexican sounds good tonight. However, your wife suggests you invest the money in an account where you’re getting 8% while she makes more spaghetti. How much money would you have in 15 years?

PV: $20
FV: unknown
PMT: $0
RATE: 8%
NPER: 15 years

Continue reading for the answer

(Answer: FV = $63.44)

How would you spend it then?

Think about that for your weekend homework.