How to Calculate Your Savings Need? - Sal Magaraci

by Salvatore Magaraci Financial Planning Services

Saving is putting money aside for future projects. For this contribution initiative to take place under good conditions, you should have an idea of your savings needs. Only based on this can you save properly. However, to calculate this amount, you need to have certain knowledge, otherwise it will be difficult for you to get there. How to determine your need for savings? Here's what you need to know!

What does need for savings mean?

The need for savings or savings capacity is the sum available to a saver after having made his current expenses. It takes into account all charges without exception, including provisions on charges such as taxes.

To successfully determine your need for savings, you must first try to group together all the expenses that you often face. To better help you in this task, here are some examples of the main fixed costs that you can take into account.

In terms of housing, consider monthly rent costs and utilities. In addition to this, we must add the costs related to water, gas, maintenance and heating.

In terms of communication, it is necessary to take into account the costs of the fixed telephone, the mobile phone and the Internet. On the transport side, you must include fuel and maintenance costs if you have a car. If not, estimate the costs of public transport and/or taxi.

Insurance costs, in turn, should take into account housing, health, schooling and car (if you have one). If you signed up for a loan, this is also the time to include the monthly amount you are expected to pay each month.

Taxes and bank charges are also details that you should not forget. Added to this are daily and regular expenses such as clothing, food, childcare (if you have any), etc. It is also worth providing a margin for leisure, because you will certainly need it when saving.

Need for savings: how to calculate it?

To calculate your savings capacity, you only have to follow two important steps. To start, consolidate all your sources of income. They are numerous and generally vary from one individual to another. Among others, we can cite salaries, rental income, family allowances, APL, etc. In other words, you must proceed as was done above for fixed costs. Once you have everything grouped together, sum them up. After adding up the income on one side and the expenses on the other, you will make up their difference. The result found is nothing but your need for savings.

Use an online calculator to calculate your savings needs

Another easy and effective method for calculating your savings needs is to use a calculator. Generally available online, this calculator can help you determine your savings needs without any effort. All you have to do is provide the various information the calculator needs to perform the calculation.

Posted by: Sal Magaraci

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