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Savings Goal Calculator

What to put aside each month, with interest doing its share.

Inputs
4years
4%
Save each month
339.76
Total you contribute
16,308.30
Interest earned
1,691.70
Interest as a share of the goal
8.46%
Months
48
Per week, roughly
78.41
monthly = (goal − start × (1+r)^n) × r ÷ ((1+r)^n − 1)

Interest covers 8.46% of the goal here. Over a longer period that share rises sharply, which is the argument for starting early rather than saving harder.

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Solve the annuity formula for the payment: subtract what your existing savings will grow to, then divide the remainder by the growth factor. Interest reduces the monthly amount, often substantially.

How to use Savings Goal Calculator

  1. Enter your target and deadline. What you need and by when.
  2. Add what you have already saved. It grows too, which reduces the monthly figure.
  3. Set an interest rate. Use the actual rate on the account you will hold it in.

About calculating a savings goal

Working out a savings plan means solving the future value of an annuity for its payment, which sounds more complicated than it is. Money already saved compounds on its own for the whole period, so the first step is to grow it forward and subtract it from the target. What remains has to be built from monthly contributions, each of which compounds for a different length of time — the first for the entire period, the last for no time at all — and the annuity formula is what accounts for that neatly. The share of the goal that interest provides is the number worth watching, because it changes the nature of the problem. Over two or three years at ordinary savings rates it is small, and the exercise is essentially division. Over ten or twenty years it becomes substantial, and at that point extending the deadline does more than increasing the monthly amount — it adds contributions and gives every earlier contribution longer to grow. That asymmetry is the whole argument for starting a long-term goal early rather than saving harder later. Rate choice should be conservative and honest. For a target within about five years the money belongs somewhere it cannot fall, which means a savings rate rather than an assumed market return; a portfolio that drops thirty percent eighteen months before a house purchase is not a temporary setback but a cancelled plan. It is also worth setting the goal in today's money and separately checking what inflation does to it, particularly when the thing being saved for is itself rising in price.

Frequently asked questions

Why does existing savings reduce the monthly amount by more than its value?
Because it compounds for the whole period. Two thousand saved now at 4% over four years becomes about 2,347, so it is that larger figure being subtracted from the goal rather than the original amount.
What rate should I use?
The rate on the account you will actually hold the money in, not a hoped-for investment return. For a goal within about five years the money generally belongs somewhere safe, which means a savings rate rather than a market one.
Should short-term savings be invested?
Usually not. Markets can fall thirty percent and take years to recover, and a house deposit needed in eighteen months cannot absorb that. The conventional line is that money needed within five years stays in cash or something equally stable.
Does inflation affect this?
Yes, if the target is a thing rather than a number. A deposit for a house that itself rises in price is a moving target, so it is worth setting the goal in today's money and then checking what it would be after inflation over the same period.
What if the monthly figure is unaffordable?
Three levers, in order of effectiveness: extend the deadline, which is powerful because it adds both contributions and compounding; reduce the target; or find a better rate, which matters least over short periods and most over long ones.

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