How long will it take me to save?
When planning for a future purchase and devising a strategy for saving towards a goal, it can be tricky to work out how long it will take to achieve it.
Perhaps you're saving for a dream holiday and want to be able to envisage laying on your sun lounger, sipping cocktails. Or maybe you have your mind set on a deposit for a house or a new car and want to understand when you might be able to lay your hands on the keys. Help is at hand, so read on...
To assist you with your future planning, I've created an easy-to-use calculator. For this you will need to know your current savings balance, your savings target and the regular monthly amounts you intend to save. I've then discussed some potential ways to make your money work for you.
Note: If you would like to know how much to save each month to reach your target in a set period of time, please use the monthly savings goal calculator.
Effective strategies for saving
Now that you've calculated how long you need to save to achieve your goal, your next step should be to figure out an effective strategy to make the most of the money you're putting away. Consider the following questions:
- Where should I put the savings in order to maximise interest?
- How can I make the strategy of saving as easy as possible?
Look around for a good savings account that offers a high interest rate and allows you to pay in regular amounts. Be aware that some accounts can offer you a high rate at first, before reducing down to a lower rate after a fixed period.
It is worth noting that you can get higher interest rates from other forms of investment, so it may be worth talking to an independent financial advisor for some tips on this. Whatever you choose, by moving your money into an investment with a good interest rate, you will be able to take advantage of compound interest, which can give a nice boost to your total.
To ensure that you keep making the regular monthly transfers required to achieve your savings goal without accidentally missing a payment, consider setting up an automatic monthly payment from your deposit account into your savings or investment account. You can then rest easy that everything is taken care of so that you're sipping drinks on your beach or taking possession of your car or house keys just when you expect to, without having to save any longer to achieve your goal.
If you would like some more tips on ways to increase your savings by making changes in your lifestyle, do take a look at our article 6 simple ways to save for the home of your dreams.
What are you currently saving for and what challenges are you facing? Share your comments with me below.
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Last update: 17 March 2015
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