Savings Goal
Monthly savings to hit your goal
The Savings Goal Calculator answers a very practical question: "If I want $X by date Y, how much do I need to put away each month?" It accounts for compounding interest, so the contribution amount it returns is realistic for an interest-bearing account or invested portfolio.
Enter the target amount, current savings (if any), expected annual return, and time horizon. The tool returns the required monthly contribution.
What it calculates
- The monthly contribution needed to reach a savings goal.
- How current savings reduce the required monthly contribution.
- How the assumed interest/return rate changes the contribution.
The formula
Future value of a regular monthly deposit:
FV = PMT × ((1 + r)^n − 1) / r + PV × (1 + r)^n
Where r is the monthly rate, n is the number of months, PMT is the monthly contribution, and PV is the starting balance. Solving for PMT gives the monthly amount needed.
Worked example
Target: $50,000 in 5 years, current savings $5,000, expected 5% annual return:
- Months:
60 - Monthly rate:
5 / 12 / 100 ≈ 0.00417 - Required monthly contribution ≈ $640
With no starting savings, the required contribution rises to about $735/month. With no interest at all, you would need 50,000 / 60 = $833/month.
When to use this
Saving for a down payment, an emergency fund target, a wedding, a major purchase, or any specific dollar-amount goal with a date attached. It is also useful for stress-testing: try a lower return rate to see how achievable the goal is in a less optimistic scenario.
Returns are uncertain
The "expected return" is a guess. Bank savings accounts give you a known rate; investments do not. If your goal is short-term (under 2–3 years), use a savings-account-realistic rate, not a stock-market average — you cannot afford to be wrong over a short horizon. For longer horizons, run multiple scenarios.
Frequently asked questions
What return rate should I assume?
For high-yield savings, use the current rate from your bank (typically 4–5% as of 2024–2025, but rates change). For long-term investments, a common assumption is 6–7% after inflation, but historical averages do not guarantee future returns.
Should I include inflation?
For long horizons, yes — express both the target amount and the assumed return in real (inflation-adjusted) terms. For shorter horizons, nominal is usually fine.
Does the calculator assume monthly compounding?
Yes. Monthly compounding is standard for savings accounts and a reasonable approximation for invested portfolios.