Why set a savings goal?
“Save more” is hard to act on. “Save 450 a month for three years” is a plan. Turning a target such as an emergency fund, a house deposit, a wedding, a car or a course fee into a monthly number makes it easy to build into your budget and to check that you are on track.
This calculator works in both directions. If you have a deadline, it tells you the monthly amount you need. If you already know what you can put aside, it tells you when you will get there. Interest is compounded monthly, so it also shows how much your bank or savings account contributes along the way.
How to use the savings goal calculator
- Choose whether you want the monthly saving needed or the time to reach the goal.
- Enter your goal and how much you have already saved.
- Enter the interest rate your savings earn. Use 0 for cash or a current account.
- Enter the number of years until your deadline, or the amount you can save each month.
- Read the result, plus the split between your own deposits and interest earned.
The formula
With a monthly rate i (annual rate ÷ 12 ÷ 100) and n months, your existing savings grow to PV × (1 + i)n. The remaining gap is covered by a regular deposit PMT:
PMT = (Goal − PV × (1 + i)n) × i ÷ ((1 + i)n − 1)
With a 0% rate this simplifies to the gap divided by the number of months. For the time-to-goal mode the calculator steps through each month, adding interest and your deposit, until the balance reaches the goal.
Example
You want 20,000 in three years and already have 2,000 in an account paying 4%. Your 2,000 grows to about 2,254.54 by itself, so the other 17,745.46 must come from deposits and the interest they earn. The calculator shows you need about 464.77 a month. Over 36 months you deposit roughly 16,732, and interest makes up the rest.
More worked examples
Without interest: saving A$10,000 in 2 years from zero needs A$416.67 a month. At 4.5% interest the monthly amount drops to about A$398.98.
Time to goal: with $2,000 saved and $300 a month at 3%, you reach $15,000 in about 41 months.
Common mistakes to avoid
- Using an optimistic rate. For goals under five years, use a savings account rate, not stock market returns.
- Forgetting inflation. A goal several years away will cost more; raise the target to allow for it.
- Saving whatever is left at month-end. Set up an automatic transfer for the amount shown. To see longer-term growth, try the compound interest calculator.
Sources and methodology
The calculations on this page follow these published standards and references. The code is covered by automated tests against known values.