Savings Goal Calculator
The goal of saving money may differ depending on your circumstances. You may be saving for a down payment on a home, for a dream vacation to pay for your next car, for retirement or for emergency purposes. It is important to set a goal before you start saving so that you can fulfill all your dreams accordingly. Here, is a tool that will help you to calculate your saving according to your specified goal. You can use a saving goal calculator to estimate the amount of saving required to achieve your goal.
Terms involved in Savings Goal
- Saving goal: this is the amount of money you want to save for your future.
- Current saving balance: the amount of money that you have already saved and will be carried towards your saving goals.
- Annual percentage Rate growth: this is the annual rate of interest you expect on your savings.
- A number of years: this is the number of years it will take to achieve your saving goals.
- Current Saving Future Value: this is the value derived from current savings plus the interest earned.
- Saving shortfalls: this is the value of shortfall from achieving your goals.
How to use Saving Goal Calculator?
Here, we have outlined basic instructions that you can follow to calculate your saving goals.
Savings Goals/ Objective: In this section of the calculator, you can define the time horizon you need to wait until you reach your saving goal. You can choose to wait a specific period of time, a certain age; or a specific date. You can also set any amount you want to save in this section.
Condition of Saving:
- Rate of interest: This is the expected annual rate of return or interest you expect over the period of time until you achieve your saving goal.
- Compounding Method: This is how often interest is added to your savings, in other words, how often your money grows.
- Rate f Inflation: The average fluctuation in the rate of inflation for that particular period.
Periodic Contribution: If you plan to make periodic contributions, when in the payment period will you make them? The growth rate of your contribution is the percentage growth rate of your additional periodic contribution over a year or longer.
Results: The main details of your savings plan are described in this section, as well as a table covering your savings schedule and a chart depicting the progress of your plan.
For Example: If you want to achieve your dream of having one million dollars upon retirement at age 65, and you invest your monthly savings on the stock market with a 10 percent annual return, then how much money will you need to put aside each month in order to reach that goal? We can tell you that you must put aside $323.69 a month to reach your saving goal.
How long will it take to save to achieve your goals?
This is referred to as the 50-30-20 budgeting method by financial advisors. They typically suggest budgeting 20% of your after-tax income each month for savings, 50% for necessities such as rent and food, and 30% for discretionary expenses (vacations or luxury items).
It may be that you have set yourself an annual saving goal to invest in a large purchase. In this case, you might need to temporarily change your savings strategy and set aside more every month. Use our calculator, above, to determine how much money you should be saving.
How are Your Saving Goals affected by inflation?
Despite the fact that it seems like a lot of money, it most probably won't be enough when you retire. If inflation averages 4 percent over the next 33 years, you will have to collect over 4,8 million dollars to keep the purchasing power of your savings. That is 1,554.07 dollars each month.
Reasons why People Fail to Save
These are some common reasons why people fail to save to achieve their saving goals:
- There is nothing left to save after all the expenses: While saving is difficult when one doesn't earn much money, if one doesn't find a wiggle room in their budget to begin investing now while they're thinking about it, they may find themself never saving for the future.
- Addiction to shopping: It's common for people to spend all their money shopping even when they are broke Don't be silly buying things just because your favorite celebrity wears them Don't go shopping, especially in the mall Discipline yourself by using your own money - not using credit cards Can't afford it?
- Low Saving Account Intrest: A 1% interest rate on a savings account is rare today In decades past, loans offered much higher rates of interest than those offered today Savers are upset by current interest rates, but they should not let this stop them from saving. Concentrate your efforts instead on savings accounts that offer high-interest rates.
- The intention of Spend Rather than save: Even you are telling yourself to spend! Your spouse and children want you to spend! You rarely hear anyone encourage you to save - don't you find that to be true? Overcoming this spending mentality is daunting but if you are concerned enough about your family's future, encourage yourself to start saving.
FAQs on Savings Goal Calculator
1. How much should my saving goal be?
The 50-30-20 budgeting method is one of the most common methods for budgeting to help save money every month, with half of your after-tax income being set aside for essentials like rent and food, and the other third for discretionary items (vacations or luxury items) by financial advisors.
2. How much should I save each month?
You should set aside at least 20% of your income for savings, while another 50% should be dedicated to necessities, while 30% should be dedicated to discretionary items. There is a rule of thumb that says you should budget your money according to 50/30/20.
3. Is $300 a good amount to save?
Yes, saving $300 per month is a great amount, with an average of 7% rate of return per year, in 35 years you will end up with $500,00.