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Our Savings Goal Calculator helps users figure out how much they need to save regularly which can mean daily, weekly monthly, or yearly, to achieve their financial goals.
It does not matter if you are saving for a house, a vacation, or just building an emergency fund, as you should, this tool calculates how much you should set aside based on your target, timeline, current savings, and interest rate but only if it applies.
Savings Goal Calculator
Step 1: Enter Your Target Savings
Note: This is the total amount you want to save by the end of the period.
Step 2: Enter Your Time Frame
Note: Specify how long you plan to save. For example, if your goal is two and a half years, enter 2 years and 6 months. You should also enter 0 if it is 0 years or 0 months.
Step 3: Enter Your Current Savings
Note: This is how much you already have saved towards your goal. Input 0 if you have not saved any amount yet.
Step 4: Enter the Interest Rate
Note: This is the annual interest rate applied to your savings. If you’re not sure, leave it at 0%.
Step 5: Choose Compounding Frequency
Note: Compounding frequency determines how often the interest is added to your savings. If you entered 0% for the interest rate, this field can be ignored.
Step 6: Choose Savings Frequency
Note: This is how often you plan to add to your savings. For example, if you save monthly, select “Monthly”.
How Our Savings Goal Calculator Works
Creating a savings plan should be easier than what most people make it out to be. Our savings goal calculator simplifies this process and gives you directly how much and how long you should save. That’s it, just try to keep up with the savings result and you will surely achieve the goal amount you are looking to save.
How the Calculator Works
Our savings goal calculator works by first getting information from the users and then implementing the formula to achieve the right savings that the user would need to do to reach their savings goals. Here are the data needed:
- Target Savings: The total amount you wish to save.
- Time Frame: How long you plan to save, expressed in years and months.
- Current Savings: The amount you already have saved towards the goal.
- Interest Rate: The annual interest rate on your savings, if applicable.
- Compounding Frequency: How often the interest is added to your balance (daily, monthly, yearly).
- Savings Frequency: How often you plan to add to your savings (weekly, biweekly, monthly).
Formula Behind the Calculator
Here’s how the calculator determines the amount you need to save per period:
1. Determine the Total Time Period:
Total Time=(Years×12)+Months
2. Calculate the Future Value of Current Savings (if an interest rate is applied):
Future Value of Current Savings = Current Savings×(1+Interest Rate / Compounding Periods) ^ Total Compounding Periods
3. Calculate the Required Savings Per Period:
Savings Per Period=(Target Savings−Future Value of Current Savings) Total Time
Example Calculation
Let’s say you want to save $10,000 in 2 years, you already have $1,000 saved, and your bank offers 2% interest compounded monthly. You plan to save monthly.
1. Total Time:
2×12=24 months
2. Future Value of Current Savings:
1000 x (1 + (0.02 / 12)) ^ 24 = 1000×1.0408=1040.80
3. Savings Per Period:
(1000 – 1040.80)/ 24 = 8959.20/24 = 373.30
So, you would need to save $373.30 per month to reach your goal.
Why You Should Start Saving Today
First, you have to know that proper savings aren’t done for the sake of just having cash aside. It needs to have a purpose and a strong why, otherwise most people will fail in achieving their desired savings amount.
So, some of those most common and important WHYs are:
- Emergency Fund: Probably the most important one because this should be a short-term goal that will help to keep your bills paid should something unexpected happen.
- Retirement: A long-term goal that you should think and carefully plan about.
- Dream House or Place: Most people rent due to how expensive owning and buying a house is, but there is just something about owning a house that will make you feel safe financially.
- Business: This one is not for everyone, but should you plan to have a business in the future, it is great to save some money for it first.
- Hobbies and Others: Everyone has hobbies, but honestly they should take less priority than the other ones above. Unless, they start helping you financially, or they are emotionally priceless.
How to Start Saving (And Stick to It!)
By now, you probably have heard a lot about how to save. So, our advice would be short and direct. It is to educate yourself about money, finances, and savings. Also, keep it simple, at least in the beginning.
Know your WHY, then use tools such as this savings goal calculator to find out how much exactly should you save or can save, and for how long. After that, you can try to be as disciplined as possible but we understand that sometimes life will throw you something unexpected. So, be flexible too.
Final Thoughts on Savings Goal Calculator
This savings goal calculator is designed to help beginners or even financially literate people to quickly find out how much savings will you need and for how long should you save to obtain your target amount while considering the interest rate and compounding effect, and your total current savings.
Our savings goal calculator is meant to be simple, easy, and free to access. So, try it out as much as you want!
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