Understanding Future Value
Future value calculates what your money will be worth at a specific point in the future, accounting for compound interest and regular contributions. It answers: "If I invest X today and add Y monthly at Z% return, how much will I have in N years?"
The Power of Growing Contributions
Increasing your contributions by even 3% per year (matching typical salary growth) dramatically boosts your final amount. $500/month growing 3% annually at 7% for 20 years yields $327,000 vs $260,000 with flat contributions — a 26% increase from payment growth alone.