What is the term for the amount to which current savings will increase based on a certain interest rate and time period?

The term "Future value" refers to the amount to which current savings will increase based on a certain interest rate and time period. In financial terms, future value represents the expected value of an investment or savings account after earning interest over a specified period. It is calculated by applying a certain interest rate to the initial amount, or principal, compounded over time. This concept is crucial in personal finance, as it allows individuals to understand how their savings can grow over time, helping them make informed decisions about investments and savings strategies.

Understanding future value is fundamental in personal finance because it underscores the benefits of saving and investing early, as well as the power of compound interest. By knowing how to calculate the future value, individuals can set financial goals and plan effectively for future expenses or retirements.