How to use the savings goal calculator
- Choose whether you want the monthly amount needed or the time to reach your goal.
- Enter your savings target and how much you have saved already.
- Enter either the number of months until your deadline or the amount you can save each month.
- Enter the interest rate you expect to earn and how often it compounds, then read the result and the savings path.
Worked example
$20,000 target, $2,000 saved, 4% compounded monthly, 36 months
You need to save about $464.77 a month (deposited at the end of each month). Switch to “time to reach goal” with $400 a month and the target takes 42 months (41.4 months exactly).
How it works
With i the monthly equivalent of your rate and compounding, the required deposit is PMT = (Target − Current × (1 + i)n) × i / ((1 + i)n − 1). The time needed is n = ln((Target × i + PMT) / (Current × i + PMT)) / ln(1 + i), rounded up to whole months. At 0% interest these reduce to simple division.
Assumptions
- Deposits are made at the end of each month and the rate stays constant.
- The interest rate is your own estimate; no rates are assumed.
- Taxes on interest are not deducted.
Frequently asked questions
Why is the monthly amount lower than target ÷ months?
Your current savings and each deposit earn interest, so less has to come from new deposits.
Why does the time-to-goal result overshoot the target slightly?
The result is rounded up to whole months, so the final deposit can take you a little past the target.
What rate should I use?
Use the rate your savings account or investment actually pays after fees, or a conservative estimate. The calculator does not assume any rate.
Limitations
- Does not model changing deposits, withdrawals or variable rates.
- Tax on interest is not included.