If you have a goal of amassing a specific sum down the road, say a year from now, or five years from now, breaking that down into regular savings goals (weekly, monthly, etc.) can be a useful approach to hit your goals. To put it more simply, if you want to save $10,000 over the next 3 years, how much should you be saving every month? or every week? Let’s help you figure out how to calculate regular savings goals on your way to larger savings goals.

## How to calculate how much you need to save: A quick estimate

One of the beautiful things about saving is that compounding interest goes to work for you. Well, when you do a quick estimate on figuring how much you need to save on a weekly or monthly basis, we’re going to ignore that for now. But of course realize that your quick estimate is going to end up being a conservative estimate, because compounding interest is going to add to your savings over time. Doing a conservative estimate is not a problem of course, because you’ll just end up with more money at the end of the day.

If you want to get a quick estimate on how much money you need to save in order to hit a certain goal, you can do a simple divide operation. If you want to establish a weekly savings goal or a monthly savings goal, you’ll divide by a specific number. Here are a few examples:

#### Quick estimate of weekly savings goal

If you want to determine how much you need to save each week to hit a savings goal for the year, simply divide by 52 (the number of weeks in a year). So, if you want to know how much to save each week to get to $1,000 in savings at the end of the year, you simply divide $1,000 by 52 = $19.23.

If you have a multi-year savings goal, and want to break it down into weekly savings, you need to factor in the number of years. If you want to save $10,000 in five years, you can do the following: $10,000 / (52 * 5 years) = $10,000 / 260 = $38.46. If you save $40 every week for five years, you’ll have over $10,000 in savings without factoring in compounding interest.

#### Quick estimate of monthly savings goal

If you want to determine how much you need to save each month to hit a particular savings goal, simply divide by 12. If you want to know how much to save each month to get to $1,000 in savings at the end of the year, simply divide $1,000 by 12 = $83.33.

If you have a multi-year savings goal, and want to break it down into a monthly savings goal, you need to factor in the number of years. If you want to save $10,000 in five years, you can do the following math: $10,000 / (12 * 5 years) = $10,000 / 60 = $166.67. So, if you save $167 every month for five years, you’ll have over $10,000 in savings without factoring in compounding interest.

## At a glance weekly and monthly savings goals with compounding interest

Since calculating true savings with compounding interest factored in takes a more complex formula or a calculator, here are some handy “at a glance” savings targets for your reference:

#### If you save $100 per week (with 2% interest compounded weekly)

If you put away $100 per week and are getting 2% interest on your money, you will have stashed $5,200 away in a year and will have an end result of $5,253.16 when you factor in interest earned.

If we look at the same scenario, but look at this over the course of five years, you will have stashed $26,100 away in five years and will have an end result of $27,455.18 when you factor in interest earned (you earned $1,355.18 in interest).

Let’s now look at the result over ten years. If you save $100 per week, every week for ten years and earn 2% compounded weekly, the end result will be $57,798.50. The interest earned is $5,598.50. As you can see the interest earned accelerates as balances and time grow.

#### If you save $100 per month (with 2% interest compounded monthly)

If you save $100 per month are are getting 2% interest on your money, you will have saved $1,200 and earned $13.08. The total result at the end of the year will be $1,213.08.

If we expand this to a five year time frame, where you save $100 every month for five years, you will have $6,315.24 at the end of the five years ($315.24 of it coming from interest earned).

Lastly, over the course of ten years, your end result will be $13,294.09 of which $1,294.09 is interest earned.

#### If you save $200 per week (with 2% interest compounded weekly)

If you put away $200 per week and are getting 2% interest on your money, you will have stashed $10,400 away in a year and will have an end result of $10,506.33 when you factor in interest earned.

If we look at the same scenario, but look at this over the course of five years, you will have stashed $52,200 away in five years and will have an end result of $54,910.35 when you factor in interest earned (you earned $2,710.35 in interest).

Let’s now look at the result over ten years. If you save $200 per week, every week for ten years and earn 2% compounded weekly, the end result will be $115,597.00. The interest earned is $11,197.00.

#### If you save $200 per month (with 2% interest compounded monthly)

If you save $200 per month are are getting 2% interest on your money, you will have saved $2,400 and earned $26.16. The total result at the end of the year will be $2,426.16.

If we expand this to a five year time frame, where you save $200 every month for five years, you will have $12,630.49 at the end of the five years ($630.49 of it coming from interest earned).

Lastly, over the course of ten years, your end result will be $26,588.17 of which $2,588.17 is interest earned.

#### If you save $500 per month (with 2% interest compounded monthly)

If you save $500 per month are are getting 2% interest on your money, you will have saved $6,000 and earned $65.40. The total result at the end of the year will be $6,065.40.

If we expand this to a five year time frame, where you save $500 every month for five years, you will have $31,576.22 at the end of the five years ($1,576.22 of it coming from interest earned).

Lastly, over the course of ten years, your end result will be $66,470.43 of which $6,470.43 is interest earned.

#### If you save $1,000 per month (with 2% interest compounded monthly)

If you save $1,000 per month are are getting 2% interest on your money, you will have saved $12,000 and earned $130.80. The total result at the end of the year will be $12,130.80.

If we expand this to a five year time frame, where you save $1,000 every month for five years, you will have $63,152.43 at the end of the five years ($3,152.43 of it coming from interest earned).

Lastly, over the course of ten years, your end result will be $132,940.86 of which $12,940.86 is interest earned.

## At a glance monthly savings goals with 5% returns

If you’re investing larger amounts every month, we should consider some larger interest rates or rates of return. While average annual stock market returns might be higher, we’ll stick with a conservative 5% annual return just for illustration purposes. Let’s look at how the money builds when you invest various amounts every month and are earning 5% on your money.

#### If you save $1,000 per month (with 5% interest compounded monthly)

If you save $1,000 per month are are getting 5% interest on your money, you will have saved $12,000 and earned $330.02. The total result at the end of the year will be $12,330.02.

If we expand this to a five year time frame, where you save $1,000 every month for five years, you will have $68,289.44 at the end of the five years ($8,289.44 of it coming from investment returns).

Lastly, over the course of ten years, your end result will be $155,929.29 of which $35,929.29 is interest earned or returns on the investment. This near $36,000 in investment returns compares to the approximate $13,000 of interest returns in the previous example of 2%. So this shows that as the rate of return grows, especially over a ten year time frame, the differences start to get large.

#### If you save $2,000 per month (with 5% interest compounded monthly)

If you save $2,000 per month are are getting 5% interest on your money, you will have saved $24,000 and earned $660.03. The total result at the end of the year will be $24,660.03.

If we expand this to a five year time frame, where you save $2,000 every month for five years, you will have $136,578.88 at the end of the five years ($16,578.88 of it coming from investment returns).

Lastly, over the course of ten years, your end result will be $311,858.58 of which $71,858.58 is interest earned or returns on the investment.

#### If you save $3,000 per month (with 5% interest compounded monthly)

If you save $3,000 per month are are getting 5% interest on your money, you will have saved $36,000 and earned $990.05. The total result at the end of the year will be $36,990.05.

If we expand this to a five year time frame, where you save $3,000 every month for five years, you will have $204,868.32 at the end of the five years ($24,868.32 of it coming from investment returns).

Lastly, over the course of ten years, your end result will be $467,787.87 of which $107,787.87 is interest earned or returns on the investment.

#### If you save $4,000 per month (with 5% interest compounded monthly)

If you save $4,000 per month are are getting 5% interest on your money, you will have saved $48,000 and earned $1,320.07. The total result at the end of the year will be $49,320.07.

If we expand this to a five year time frame, where you save $4,000 every month for five years, you will have $273,157.77 at the end of the five years ($33,157.77 of it coming from investment returns).

Lastly, over the course of ten years, your end result will be $623,717.16 of which $143,717.16 is interest earned or returns on the investment.

#### If you save $5,000 per month (with 5% interest compounded monthly)

If you save $5,000 per month are are getting 5% interest on your money, you will have saved $60,000 and earned $1,650.09. The total result at the end of the year will be $61,650.09.

If we expand this to a five year time frame, where you save $5,000 every month for five years, you will have $341,447.21 at the end of the five years ($41,447.21 of it coming from investment returns).

Lastly, over the course of ten years, your end result will be $779,646.44 of which $179,646.44 is interest earned or returns on the investment.

#### If you save $7,500 per month (with 5% interest compounded monthly)

If you save $7,500 per month are are getting 5% interest on your money, you will have saved $90,000 and earned $2,475.13. The total result at the end of the year will be $92,475.13.

If we expand this to a five year time frame, where you save $7,500 every month for five years, you will have $512,170.81 at the end of the five years ($62,170.81 of it coming from investment returns).

Lastly, over the course of ten years, your end result will be $1,169,469.67 of which $269,469.67 is interest earned or returns on the investment.

#### If you save $10,000 per month (with 5% interest compounded monthly)

If you save $10,000 per month are are getting 5% interest on your money, you will have saved $120,000 and earned $3,300.17. The total result at the end of the year will be $123,300.17.

If we expand this to a five year time frame, where you save $10,000 every month for five years, you will have $682,894.42 at the end of the five years ($82,894.42 of it coming from investment returns).

Lastly, over the course of ten years, your end result will be $1,559,292.89 of which $359,292.89 is interest earned or returns on the investment.

## The power of saving and investing on a regular basis

There are two main reasons why stashing money away on a regular basis and investing money regularly is extremely powerful.

First, dollar-cost averaging means that the impact of volatility in the markets gets reduced. If you’re investing and buying shares of a company or an index fund each week or each month, you are limiting the potential of allocating a large amount of assets at a disadvantageous point in time. You’re smoothing out your entry point over a long period of time and thus reducing risk of bad timing.

Next, as we’ve already stated the compounding effect of interest or investment returns is significant. This is why you’ll see so many financial articles on why it’s super important to start investing early. The reason for that is because by doing so you give more time for compounding interest to earn you money. As the timeframe expands, the power of compounding interest grows dramatically.