How Much Should I Save To Reach My Financial Goal?

Saving money is one of those commitments that is easier said than done. According to studies, 1 out of 3 Americans do not have savings and only 6% of the total income is saved every month. With the 6% savings every month, find out how long it will take you to reach your savings goal using the savings goal calculator.

Top Common Reasons For Not Saving

Nothing is left to save.

It is true that it is really difficult to save when you don’t earn much money. But this difficulty will increase if you will just wait to see how much is left at the end of month. For sure you will never save money.

I Am A Shopaholic.

Some people spend all their money for shopping to look good even if they are broke. Don’t be silly buying expensive branded items or buying items that you don’t need just because your favorite movie star is wearing it. The easiest way to break this habit is avoid going to stores. Discipline yourself buying in cash instead of using your credit card. Your inability to buy in cash is a good indicator that you cannot afford it.

Too Much Debt To Pay.

What is your debt-to-income ratio? The expected debt-to-income ratio for every household is 36% or less. If your ratio is more than 50% then you should be more concerned. To calculate your debt-to-income ratio, add up all your monthly debt payments and divide by your monthly household income. It is always advisable to pay off your debt first before saving money. To find out how long it will take you to pay off your debt, use the debt pay off calculator.

Savings Account Interest Rate is Very Low.

The current interest rate for savings account in banks is less than 1% per year.  While during the 80’s and early 90’s, it averaged to 8% per year. The current rate is very upsetting to the savers but you should not use this as a reason not to save.

Nobody Wants To Save.

Your spouse and children want to spend.  Even your own self is telling you to spend. Nobody ever encourages you to save. Overcoming this pressure is really difficult. But if you care enough for your future and your family’s future, beat the spending society by encouraging yourself to start saving.

How Much Should I Save?

The best formula to follow for you to be able to save is income minus savings equals expense. But before you begin your journey to saving, ask yourself what is my goal for saving? How long it will take me to reach my savings goal? How much you need to save will depend on the size of your goal. Use the savings goal calculator to determine how long it will take you to reach your savings goal. The following terms will guide you to determine how much you need to save monthly.

Savings Goal
The amount of money you want to have in the future.

Current Savings Balance
The money you have saved in the bank or you put in investment that is intended for savings.

Annual Percentage Growth
The annual percentage rate that you earned if you invest to grow your savings.

Number of Years
This is the number of years you want to achieve your financial goal.

Current Savings Future Value
The value of your savings plus interest earned.

Savings Shortfall
The amount of money you need to save for you to reach your financial goal.

How Much To Save Each Month
The amount you need to save each month to reach your financial goal.

When Is The Best Time To Start Saving?

There is no best time to start saving but now. The sooner you start saving, the sooner you will reach your savings goal.