It’s good to know that you want to save money.
It shows that you have realized the importance of saving money for building a financially secure and stable future.
And now you are confronted with the most obvious question, and that is, “How Much Money I Should Save?”
That’s Ok!
Well, besides the task of saving money, it is equally important to know beforehand how much money you actually require to save so that you are able to live a prosperous and financially independent life.
You need to figure out exactly how much money you require to save.
And you would be glad to know that you can really come to know how much money you should save.
“The most heartening fact is that you can determine the figure you need to save.”
The following post is meant to help you to determine how much money you should save.
The task is actually remarkably simple and can be accomplished by following a series of steps.
So let us begin the journey of finding out how much money should you save.
Determine The “Target(S)” For Which You Want To Save
It is a well established fact that in the absence of a goal or target, you end up achieving nothing.
The same holds true even in relation to saving money. You would not be able to save money if you do not set a target for it. You essentially lack the very purpose and motivation of saving money. So even if you begin saving money, the journey never meets its destination.
Thus, you need to determine target(s) for which you want to save money.
The targets can be a short-term goal, or it may be a long term objective.
It can comprise of setting up of Emergency Fund, buying a car or even for doing savings for post-retirement life.
Whatever targets you set, they must be properly defined and be absolutely clear to you.
Set a Time Limit for Achieving Your Targets of Saving Money
After determining the targets for saving money; the next step is to have a time limit for achieving the targets. This is extremely important as your goals and targets are meaningful to you only when they are achieved within a definite time period.
There’s no point in saving money for an Emergency when you actually end up facing an emergency situation. Likewise, buying a car at an age of seventy would probably be less valuable to you than buying a car at an age of thirty.
So You Should Set A Time Limit.
For example, you can set a time limit of two years for buying a car, and if you are aged thirty you can go for choosing a time limit of twenty-five years for building your retirement fund or corpus.
Having a time limit for achieving your various targets for saving money helps you to come out with the exact amount that you have to save regularly in order to fulfill your dream.
Finally, How Much You Have To Save?
Well every person has a unique set of goals and different earning potential and expenditure liabilities. According to their unique set of conditions, they choose a different time periods to achieve their targets of saving money.
So there cannot be a standard solution and a predefined figure which you have to save.
It depends on your goals, earnings, expenditures and of course the time period for achieving your saving targets.
However, here we depict an example to show you how much you have to save.
You can incorporate this in your real life situation.
Suppose you are earning $1000 a month, and your expenses are $900. So in such a condition you are saving a total of $100 for yourself. In this scenario, you have to allocate your earnings to the targets you have set. Let us assume that you have a single target to achieve of say 1000 dollars. Then with a monthly saving of $100, you need to save regularly for 10 months in order to achieve your goal.
The simple formula for calculating the money you need to save goes like –
“Total Money to Save” (Divided By) “Time Period”
For example, if you wish to save a total of $5000 in a time period of 20 months towards your goal, then in such a scenario, you have to save $250 each month.
Conclusion
So you see that there can be thousands of such a scenario where you have different targets, time periods and saving allocations. You have to save according to your set of own conditions and, so you would arrive at a figure which you need to save regularly in order to achieve your goals.
You need to save continuously until you achieve your targets.
Now, hopefully you would not face difficulty in determining How Much Money I Should Save.
