What Will it Take to Save For a Big Purchase?

There are 4 main elements to consider when saving for a particular expense: how much you have already put away in savings, how much you are able/willing to put away each month in the future, for how many months you will be putting the money away and what your savings rate (the amount of money you will make on your savings) is. Taxes are also part of the equation because you are required to pay taxes on the earnings you make on your investments.

Each of these items effect one another and by playing around with them you can find out if your current savings plan will or will not work, and, if not, what you need to do to make it work.

For example, if you decrease the time you have to save, you are going to need to put away more each month. On the other hand, if you start putting away more than you expected, you will reach your savings goals sooner than expected. Unlike the others, taxes are not something you can alter to achieve your savings goals.

Play around with this calculator to see if you are on the right track.