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Once you determine how long you have to save for a goal, divide the time you have by the amount you think you can save or invest. If, for example, you want to save $500 by next year, you'll need to put aside $41.67 ($500 divided by 12) a month, or $9.61 ($500 divided by 52) a week. The amount you'll need to put aside each week or month will be less if you deposit the money in an account or an investment that earns interest. The table shows you that if you put $10 a month in a bank account earning 3 percent interest, in a year you'll have $122. If you put aside $40 a month, you'll have $488 ($122 times 4). If you can earn a higher interest rate -- say, 7 percent -- after one year you'll have $500. The table also shows how money will grow at various interest rates over a period of time and can be used to find out how long it will take to reach your financial goals. It shows the growth of monthly $10 deposits invested at various interest rates. Put aside $10 a month for five years at 10 percent, for example, and you'll have $781 -- the figure at the intersection of the year five and 10 percent interest columns. If you can invest $50 each month, you will have five times $781, or $3,905.
Adapted from "How to Save $1,000 or More a Year," by Denise M. Matejic, Rutgers Cooperative Extension Service.
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