Setting savings goals is sibeh important lah. If you anyhow spend money without a goal, sure kena broke one time, then sibeh jialat liao. When you got a savings goal, can plan properly and control spending better, like don’t overspend on unnecessary things lah . Plus, seeing your savings grow gives you shiok shiok motivation to continue. At the end, when you reach your goal, wah, damn satisfying lah, can use the money for something meaningful or even for emergency, no need to be kancheong spider.Eh sai boh ?
Monthly Savings Table
How to Calculate Monthly Savings Using the Compound Interest Method
The Formula is as Follows
- PV = Present Value or your Starting Balance
- r = Annual Interest Rate %
- n = Number of Years
- PMT = Savings Per Month
Formula for Monthly Savings (PMT):
$$PMT=Saving Goal−PV×(1+r)n[(1+r/n)n−1r/n]PMT = \frac{\text{Saving Goal} – PV \times (1 + r)^n}{\left[ \frac{(1 + r/n)^n – 1}{r/n} \right]}$$
Example:
Eric has a starting balance of $1000. He sets a savings goal of $5000 over a 2-year period. The bank provides him with an interest rate of 2%.
Using the formula:
$$PMT=Saving Goal−PV×(1+r)n[(1+r/n)n−1r/n]PMT = \frac{\text{Saving Goal} – PV \times (1 + r)^n}{\left[ \frac{(1 + r/n)^n – 1}{r/n} \right]}$$
Plugging in the values:
$$PMT=5000−1000×(1+2%100/12)2 years×12[(1+2%100/12)2 years×12−12%100/12]PMT = \frac{5000 – 1000 \times (1 + \frac{2\%}{100}/12)^{2 \text{ years} \times 12}}{\left[ \frac{(1 + \frac{2\%}{100}/12)^{2 \text{ years} \times 12} – 1}{\frac{2\%}{100}/12} \right]}$$