Savings Distribution Calculator

Step-by-Step Guide to Using the Savings Distribution Calculator

Step 1: Input Your Monthly Income

Begin by entering your monthly net income in the field labeled ‘Monthly Net Income’. This will be your after-tax monthly earnings. Ensure that the amount you enter is accurate as it will be the basis for further calculations.

Step 2: Define Your Savings Goal

Next, input your ‘Target Savings Goal’. This represents the total amount you aim to save over a specific period. Enter this value in your preferred currency, in this case, USD.

Step 3: Set Your Savings Timeframe

In the ‘Timeframe (months)’ field, specify how many months you plan to save to reach your target goal. Keep in mind that the number of months must be between 1 and 600.

Step 4: Select Your Investment Risk Profile

Choose your investment risk profile from the provided options: Conservative (Low Risk), Moderate (Medium Risk), or Aggressive (High Risk). Your selection will help tailor the guidance and allocations to suit your risk appetite.

Step 5: Review Calculation Results

• Required Monthly Savings: This is calculated based on dividing your savings goal by the number of months in your timeframe. It displays the exact amount you need to save each month to reach your target.
• Emergency Fund Allocation: Suggested savings for an emergency fund is computed as six times your monthly income.
• Retirement Savings Allocation: Forty percent of your required monthly savings are allocated toward your retirement fund.
• Short-term Savings Allocation: Thirty percent of your required monthly savings are allocated for short-term needs.
• Investment Allocation: Another thirty percent of your required monthly savings can be directed towards investments, aligning with your risk profile.
• Savings Rate (% of Income): This percentage indicates how much of your current income will be put aside as savings relative to your income; it helps assess the feasibility of your savings plan.
• Projected Total Savings: This is an outlook of what your total savings will be if you consistently save the calculated monthly amount for the entire timeframe.

Step 6: Adjust as Necessary

If the calculations suggest that the savings target is too ambitious within the chosen timeframe, consider revisiting your initial inputs. You might adjust the timeframe, modify the target goal, or reassess your investment risk profile to align better with your financial capacity and goals.