Estimating how much you need to save every month depends entirely on your savings goals. We generally tend to save with specific goals in mind. For instance, you may be saving to buy a new phone, plan a trip, or build a retirement corpus. Each of these goals has a different timeline and target amount. Your savings and investment approaches must be well-aligned to achieve these goals.
Understanding your financial goals helps estimate how much you need to save in the following ways:
- You assign a target amount to each goal, helping you understand how much you need to save periodically to achieve the target amount.
- You determine when you want to achieve the goal—whether within a couple of years or a decade - to draft a systematic savings plan for the goal.
- Based on the goal’s timeline and your general comfort with investment risk, you can estimate the amount of risk you can tolerate to achieve it.
You must also remember that your savings target will depend on your age, monthly income, liabilities, and debts. When determining how much to save, you must consider these factors as well. If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.