How Much Should I Save for a Future Goal?
This calculator helps you determine how much you need to save to afford a future goal.
A lot has been written about the current state of the average American’s saving accounts. In short, most people are not adequately building up a savings “nest egg” for retirement, emergencies, or future major purchases. In fact, according to a 2015 survey by American Family Financial, the average savings account balance for American families is only $3,950, and 25% of American families have no savings whatsoever.
All financial experts agree on the importance of allocating a reasonable portion of your income to a savings account. While the specific percentage recommendations vary, they typical fall between 10% and 20% of your income stream. One recommendation gaining popularity in the press is the 50/20/30 rule, where 50% of your income is spent on necessities, 20% is allocated to savings, and 30% is used for discretionary purchases.
In terms of savings, most Americans are focused on their retirement planning. However, there are a number of other things that the typical consumer should factor into their savings strategy. These could include an emergency next year, extinguishing debt, future life events (e.g., weddings), or future large purchases, such as an automobile or a down payment on a new home purchase.
The Savings for a Goal Calculator below can help you plan your savings strategy for these future expenditures. The calculator will help you determine how much you need to save to reach a future savings goal. Based on your selections, the calculator will show you how much you should save on a monthly basis, the minimum rate of return that is required, or the number of years it will take you to reach your goal.