Setting Up a Savings Plan Using the BizWizard in MyOwn10-Key

There are generally two types of  savings   plans . One is where you decide to set aside a fixed amount or percent of your income with no purpose in mind other than accumulating  savings . Then there are  savings   plans  where you have a specific amount that you need by a specific date. This procedure addresses the steps you can use to set up the latter type of targeted  savings   plan . The purpose of the  plan  can be any goal, such as a large purchase, a vacation, something as far off as retirement, or just for “a rainy day.”

Setting up a targeted  savings   plan  requires that you know:

(1) how much you will need;

(2) when you will need the money; and

(3) the amount of interest your  savings  account will earn.

  1. Determine the interest rate you will be earning. This can be done by calling your bank and asking what the interest rate is on a  savings  account. You can also discuss your  options  with a financial planner. However, if you are starting a new  plan  with a new account, a  savings  account at a bank or credit union may be your simplest  option .
  2. Open the myOwn10-Key BizWizard. After starting myOwn10-Key, either click on the Functions menu and then the BizWizard command or press F2. The “Annuity future value”  option  should already be selected in the BizWizard.
  3. Enter the interest rate earned by your  saving  account in the APR textbox. As shown in the BizWizard window, an example interest entry is 6.5 when the rate is 6 1/2%.
  4. Enter the number of months or years until you need the money in the Total Periods textbox. If you enter months, select the “Mo”  option  to the right of the Total Periods textbox. If you enter the number of years, select the “Yr”  option .
  5. Enter a Payment Per Month amount. Enter the maximum amount you feel you can afford to deposit every month toward your  savings  goal.
  6. Calculate the Future Value. Click the Calculate button. The amount of money you will accumulate making the entered deposits for the entered amount of time will be displayed in the Future Value textbox.

If the calculated Future Value is more than your goal, you have these  options .

  • Lower the Payment Per Month amount and click the Calculate button. This will make your monthly deposits smaller while accumulating the recalculated Future Value amount in the same number of months or years.
  • Lower the Total Periods amount and click the Calculate button. This will keep your monthly deposits the same and accumulate the recalculated Future Value amount in a shorter period of time.
  • Leave the Payment Per Month and Total Periods the same. You will accumulate the higher calculated Future Value amount instead of the original target amount.

If the calculated Future Value is less than your goal, the best  option  is to increase the Total Periods (clicking the Calculate button after each change to the Total Periods) until the recalculated Future Value amount is the same, or more than the original target amount. Increasing the Payment Per Month is probably not a good idea unless the first Payment Per Month amount you entered was conservative.  Planning  on making higher deposits every month may create a financial strain that will make staying with your  savings   plan  difficult.

Once you have decided on a monthly deposit amount, open your new  savings  account with the first deposit and you are on your way to your goal.



Source by George Gilbert

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