How to use the savings goal calculator
Enter how much you want to save, how much you already have, and when you want to reach your goal. Add
the interest rate your savings account pays. The calculator works out the fixed amount to deposit at the
end of every month so that, with interest, you hit your target right on time.
The formula
The monthly saving needed is:
PMT = (Goal − S × (1 + r)n) × r ÷ ((1 + r)n − 1)
where S is what you've already saved, r is the monthly interest rate
(annual rate ÷ 12 ÷ 100) and n is the number of months. With no interest, it's simply
(Goal − S) ÷ n.
Example
To grow $2,000 into $20,000 in 3 years at 4% interest, you need to save about $464.77 a month.
You deposit about $16,732 and earn roughly $1,268 in interest along the way.
Ideas for savings goals
- An emergency fund of 3–6 months of expenses
- A down payment on a home
- A car, so you can pay cash instead of taking a loan
- A wedding, vacation or education
Frequently asked questions
How much should I save each month?
It depends on your goal and timeline. A common rule of thumb is to save at least 20% of your take-home pay overall. For a specific goal, enter the target and date above to get an exact monthly amount.
Should I include interest?
If your savings are in an interest-bearing account, yes. Even a few percent reduces how much you need to put aside. If the money sits in a regular checking account, set the rate to 0 for a conservative estimate.
Where should I keep money for a short-term goal?
For goals within a few years, such as a vacation, a car or a house deposit, a high-yield savings account or a certificate of deposit is usually safer than investing in stocks, whose value can fall right before you need the money.
What if I can't afford the monthly amount?
Try extending the timeline, lowering the goal, or starting with what you can and increasing it when your income grows. Automating a transfer on payday makes saving much easier to stick to.