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Importance of Financial Planning and Saving in Saudi Arabia
Financial planning and saving are among the most important pillars for achieving financial stability in Saudi Arabia. With the major economic transformations the Kingdom is undergoing as part of Vision 2030, it has become essential for every individual to have a clear savings plan with defined goals. Studies indicate that a significant percentage of Saudis do not have an organized savings plan, exposing them to financial risks during emergencies or when large sums are needed.
The savings goal calculator helps you create a realistic and actionable plan. Whether you are saving for an emergency fund, buying a home, or funding your children's education, setting a clear goal and knowing the required monthly amount significantly increases your chances of success. The golden rule of saving is the 50-30-20 rule, where you allocate 50% of your income to needs, 30% to wants, and 20% to savings and investments.
It is also important to consider inflation when planning for long-term savings. The inflation rate in Saudi Arabia ranges between 2-3% annually, so your return rate on savings should exceed the inflation rate to maintain your money's purchasing power. Choosing the right savings vehicle whether a savings account, Murabaha deposit, or investment funds depends on your goals, available timeframe, and acceptable risk level.
Saudi Bank Return Rates and How to Benefit from Them
Saudi banks offer a diverse range of savings accounts and deposits with competitive return rates. Regular savings accounts at banks like Al Rajhi, SNB, and Riyad Bank offer returns ranging from 1% to 2.5% annually with withdrawal available at any time. These accounts are suitable for emergency funds and short-term goals because they provide high liquidity.
Term deposits and Murabaha offer higher rates ranging from 3.5% to 5.5% annually in exchange for locking your money for a set period ranging from 3 months to a year or more. Bank Albilad, Alinma Bank, and Al Rajhi Bank offer Sharia-compliant Murabaha accounts with competitive returns. The longer the deposit period, the higher the return rate offered by the bank.
To maximize your savings benefits, you can divide your money across multiple accounts. Keep your emergency fund in a regular savings account for quick access, and place amounts you do not need soon in term deposits with higher returns. Some banks also offer automatic savings programs that transfer a set amount from your current account to your savings account every month automatically, which is an effective way to build a savings habit.
Smart Savings Strategies to Achieve Financial Goals
Achieving financial goals requires more than just setting money aside each month. The first strategy is automation where you set up an automatic transfer from your current account to your savings account at the beginning of each month right after your salary arrives. This ensures saving happens before you start spending, known as the pay yourself first principle.
The second strategy is breaking large goals into smaller milestones. Instead of focusing on a big goal like saving 200,000 SAR for a house down payment, break it into quarterly goals. Celebrate when you reach each milestone as this keeps you motivated. The savings goal calculator shows you progress milestones at 25%, 50%, and 75% of your goal to help you track your progress.
The third strategy is increasing your income while maintaining your spending level. When you receive a salary raise or bonus, allocate the larger portion to savings instead of raising your standard of living. Also look for additional income sources such as freelancing or selling products online. This strategy significantly accelerates your progress toward financial goals and reduces the required timeline.
Common Savings Goals in Saudi Arabia
Savings goals for Saudi Arabia residents vary according to life stages and personal priorities. One of the most important goals is the emergency fund, which experts recommend covering 3 to 6 months of expenses at minimum. This fund provides a safety net in case of job loss, illness, or unexpected breakdowns. For someone with monthly expenses of 8,000 SAR, they need between 24,000 and 48,000 SAR in their emergency fund.
Marriage is one of the biggest financial goals for young Saudis, with wedding costs ranging from 100,000 to 300,000 SAR depending on the city and celebration level. Saving for marriage early reduces the need for borrowing and saves you financing costs. Car purchase is also among the priorities, with popular car prices ranging from 60,000 to 150,000 SAR, and many prefer to buy with cash to avoid financing installments.
The house down payment has become a primary goal with the Sakani program requiring a minimum down payment of 10% of the property value. For a house worth one million SAR, you need 100,000 SAR as a down payment. Hajj and Umrah are also important goals with Hajj costs ranging from 15,000 to 50,000 SAR. Private university education costs range from 50,000 to 120,000 SAR annually. Early planning for these goals makes achieving them easier and less financially stressful.