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Savings Goal Calculator

How much should I save each month?

How it is calculated

The tool finds the monthly deposit that reaches a target with compound interest. The annual rate is divided by 12: r = rate / 100 / 12, and the growth factor is g = (1 + r)n for n months. Your current balance grows alone to current × g. What remains is goal − current × g, and the monthly deposit is PMT = remaining × r / (g − 1). Deposits are assumed at the end of each month, with interest compounded monthly. At a 0% rate the remaining amount is simply split over the months. If the current balance already grows to the goal, the tool says the goal is reached. It also shows total contributions and the interest earned. Fractions of months are cut off, and taxes and inflation are ignored.

Worked example

The goal is 12,000, the current savings are 2,000, the annual rate is 6% and the time frame is 24 months. The monthly rate is 0.5% (r = 0.005) and the growth factor is 1.00524 ≈ 1.1272. The 2,000 already saved will grow to about 2,254.32, leaving 9,745.68 to be filled. The deposit is 9,745.68 × 0.005 / 0.1272 ≈ $383.21 per month. Contributions in total are 2,000 + 24 × 383.21 = $11,196.95, and the interest earned makes up the remaining $803.05.

Try this example →

Common mistakes

  • Entering the time frame in years. The field is in months, so 2 years must be entered as 24.
  • Using a rate from a savings account that is quoted with a different compounding or after tax; the tool assumes simple monthly compounding of the annual rate you give.
  • Ignoring inflation: the nominal goal buys less in the future, so the target may need to be larger.
  • Expecting the result to include the first deposit today. Here the first payment is made at the end of month one.

Sources

About this calculator

This calculator works out how much needs to be set aside on a regular basis to reach a specific savings target within a chosen number of months, taking into account whatever you have saved already and any interest the balance might earn along the way. Because that starting balance grows too, and interest reduces how much of the target has to come from contributions alone, the required deposit amount is usually smaller than a simple division of the goal by the number of periods.

People use it when saving toward a concrete goal with a deadline, such as a vacation, a wedding, a down payment, or a big purchase, since it turns a vague goal into a specific monthly amount to set aside. It's also useful for checking whether a current savings pace is actually on track over the months available.

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Comments (1)

  • Editorial team

    A handy way to use this is to run it twice, once at the interest rate you hope for and once at zero. The gap between the two monthly figures shows how much of your plan depends on interest, and a small gap means the deposit habit does the real work. The deposits are assumed at month end and nothing here accounts for tax or for prices rising before you spend the money. What are you saving for, and over how many months?

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