After doing these examples, did you notice how the three pieces of information (total amount of
savings, number of weeks, and amount needed to save every month) are related to each other?
Though the amount of total savings is the same in both, you’d need to save more each week in
the second example, because you have fewer weeks to save. This relationship is a good rule to
remember.
If you shorten your length of saving time (like from 32 weeks to 16 weeks), but keep your money
goal the same ($500), you will need to increase the amount of savings per week (from $15.65 to
$31.25) to reach your goal.
It’s helpful to use this formula when figuring out if your goal is actually reachable. For example,
in September you decide to buy a new television by the end of November. You’ve looked at
models, and the one you want is $600. If you start saving at the beginning of September, you
have twelve weeks to save. You can plug this into the formula to see how much you’d need to
save each month.
$600 ÷ 12 = $50 per week
You would need to save $50 every week (or $200 every month) in order to meet this goal. But
what if you don’t have $50 extra dollars in your cash flow budget? Does that mean buying a new
television is a bad goal?
No – it just means you need to make an adjustment to either the amount of savings or to the
length of time you have to save so that the goal is attainable. Are you willing to buy a less
expensive television? Here is an example of adjusting your goal and purchasing a less expensive
($300) television:
$300 ÷ 12 = $25 per week
By lowering the total amount of savings to $300, you bring your monthly weekly savings to $25,
which might fit more easily into your cash flow budget. But if you don’t want to buy a less
expensive television, what else could you do to make this goal attainable? You can decide to
lengthen the savings period. Instead of saving for three months, you extend the time to six
months or 24 weeks to save for the television:
$600 ÷ 24= $25 per week
By giving yourself 24 weeks to save instead of 12, you can bring your weekly savings down to $25
and purchase your desired television in February instead of November.