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By UNDERSTAND A SAVINGS FACTORS TABLE So far you have identified your savings goal, your savings time frame, and your earned interest rate. A savings factors table shows the relationship among these factors. Study the savings factors table below. The decimal numbers tell you how much money you need to save each month in order to accumulate $1 at various interest rates and time frames. An example will help you understand how the savings factors table works. Suppose you want to accumulate $1,000 (your savings goal) in one year (your target time frame). Your bank pays 4% on passbook savings accounts (your earned interest), At the point where the 1-year column (your time frame) intersects the 4% row (your earned interest rate), you find the figure .081817. This is how much you would need to save each month to accumulate just one dollar in a year. Your goal is to accumulate 1,000 times as much ($1,000), so you need to multiply .081817 by 1,000. The answer, about $81.82, is how much you would need to save each month to reach your savings goal. : Monthly Savings Factors Table Monthly Savings Necessary to Accumulate $1 Target Time Frame (years) 2 3 4 5 6 7 8 9 10 0.081817 0.040092 0.026191 0.019246 0.015083 0.012312 0.010335 0.008856 0.007708 0.006791 - 0.081441 0.039705 0.025804 0.018863 0.014705 0.011938 0.009967 0.008493 0.007351 0.006440 0.081066 0.039321 0.025422 0.018485 0.014333 0.011573 0.009609 0.008141 0.007006 0.006102 0.080693 0.038939 0.025044 0.018113 0.013968 0.011216 0.009259 0.007800 0.006673 0.005778 0.080322 0.038561 0.024670 0.017746 0.013610 0.010867 0.008920 0.007470 0.006352 0.005466 0.079951 0.038185 0.024300 0.017385 0.013258 0.010526 0.008583 0.007150 0.006043 0.005168 0.079583 0.037812 0.023934 0.017029 0.012914 0.010193 0.008268 0.006841 0.005745 0.004882 0.079215 0.037441 0.023572 0.016679 0.012576 0.009867 0.007956 0.006542 0.005459 0.004608 0.078849 0.037073 0.023214 0.016334 0.012244 0.009550 0.007653 0.006253 0.005184 0.004347 0.078484 0.036708 0.022861 0.015994 0.011920 0.009241 0.007352 0.005974 0.004920 0.004098 0.078120 0.036346 0.022511 0.015660 0.011602 0.008939 0.007073 0.005705 0.004667 0.003860 0.077758 0.035987 0.022165 0.015331 0.011290 0.008645 0.006797 0.005445 0.004424 0.003633 10. Suppose your savings goal is to accumulate $5,000 in one year. Your earned interest rate is 5%. How much money will you need to save every month to reach your goal? 11. Suppose you could double your earned interest rate to 10%. How much would you now need to save each month to accumulate $5,000 in one year? 12. Consider your answers to questions 10 and 11. What conclusions can you draw
