Tanza Loudenback wrote a self help guide in the Business Insider that spells out the equation she uses to figure out how much money to save for any goal  in a five year time period and states that a simple equation breaks down the big goal into smaller, more achievable ones.

First, you need to know two things: your target balance and when you want to get there, then, plug those numbers into this equation:

Total amount needed ÷ the number of years until the event or purchase ÷ 24 paychecks in a year = how much to save every time you get paid.

She saves money automatically through direct deposit. Twice a month when her paycheck comes in, part of it goes into my checking account to cover bills and part of it goes into her  high-yield savings account for a specific goal. I’ve found this is the best way to ensure goals are a true priority.  If you don’t get paid on a regular schedule or prefer to save monthly instead, simply swap out the final part of the equation — the number of paychecks per year — with 12, to represent the number of months.

She also states there are other factors that can help reach the goal faster.  They include: High Yield Savings Accounts, Pay Raises and Windfalls.

Tanza is a Certified Financial Planner and frequently writes about saving money, retirement planning and strategies for building wealth.  If you have a question, you can fill out this anonymous form here.

Enjoy the quick read by following the link below.

Source: How much money to save to meet any goal in the next 5 years – Business Insider