Q. I am a newly graduated, single RN. This is my first job, and I want to spend my money wisely. Primarily, I'd like to begin saving for a home, my children's college education, and retirement. I plan to make monthly installments in an investment plan available through work. I'm not sure how much to set aside each month to reach my financial goals. What guidelines do you have to help me decide how much to save?
A. Written goals are essential for reaching your financial objectives. Once this has been established, the process of determining how much to set aside each month and the number of years involved is actually very simple. The chart is designed to help you establish realistic targets toward which to aim. This is how it works.
Imagine that in 20 years you will need $100,000 for your child's education. You have learned that the mutual fund in which you plan to invest has an overall return of 8% during the past 10 years. Based upon this knowledge you want to know how much to invest each year at 8% interest in order to achieve your goal.
First, run your finger down the year column to the year 20. Then move it over to the 8% column where you will find the number 45.762. Divide the number into $100,000 to learn the amount you need to invest annually in order to meet your objective. In this case $100,000 divided by 45.762 equals $2,185.22. This means by investing $2,185.22 each year over a 20-year period you will have the $100,000 needed. Divided by 12, this is $182.10 per month.
Following this formula, you will know exactly how much to put away each year in order to meet your financial goals.
Key Takeaways
- Understanding the core concepts is essential for growth
- Consistent application of principles leads to transformation
- Small daily actions compound into significant results
- Mindset shifts are the foundation of lasting change
Moving Forward
The journey of personal growth and transformation is ongoing. Each step you take, no matter how small, contributes to your overall development and success. Remember that progress is not always linear, but persistence and commitment to your goals will ultimately lead you to where you want to be.
I encourage you to take action on what resonates with you from this article. Choose one key insight and implement it into your daily routine. Small, consistent changes often lead to the most profound transformations.