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How to calculate your savings goal
With a savings goal calculator, it’s never been easier to figure out exactly how much and how frequently you need to save to reach your goal. However, there are a few things you need to figure out before diving right into the savings goal calculator. Here’s a few simple steps to get you started:
- Define your savings goal: Try to be as specific as possible, so there won’t be any surprises after you hit your goal. For instance, if you’re saving for a new car, make sure you include all the trim options or additional warranty costs that might increase the overall price. If it’s a vacation, don’t stop at airfare and hotel costs. You’ll want to add in the costs of meals, excursions, souvenir shopping, etc. The savings goal calculator is a smart tool, but it can only operate based on the information you give it.
- Set a time frame: Now figure out when you need to have the money saved by. This will help the savings goal calculator determine how much you need to save each month. A vacation might require you to have the money saved by a certain time of year, but some savings goals aren’t as specific. In that case, try to be realistic about how fast you need to have the money. Savings should feel rewarding, not stressful.
- Input the information into the calculator: Now the savings goal calculator is ready to do its job for you. It uses the following information to come up with a calculation:
- Savings goal: The total amount you need to save
- Current savings: The amount of money you have already saved towards your goal
- How long you plan on saving: The number of months or years you must save
- Interest rate: The annual interest rate you expect to earn on your savings
