Savings Goal Calculator
What is a savings goal?
A savings goal is a specific financial objective you want to achieve within a set timeframe. It can range from an emergency fund to a house down payment, a dream vacation, or retirement.
Our calculator helps you determine how much you need to save each month to reach your goal, considering your current savings and the interest you can earn.
Monthly savings formula
PMT = (Goal - Current × (1 + r)^n) × r / ((1 + r)^n - 1)
Where:
- PMT = Required monthly payment
- Goal = Target amount you want to reach
- r = Monthly interest rate (annual rate / 12)
- n = Total number of months
Why does interest matter?
Compound interest is your best ally when saving for the long term. The higher the interest rate on your savings account or investment, the less you need to contribute from your own pocket.
If your goal is to save $10,000 in 5 years without interest, you need to save $166.67/month. But with a 5% annual interest rate, you only need $147.05/month.
Tips for reaching your savings goal
- Automate your savings: Set up automatic transfers on payday
- Choose the right account: Look for savings accounts with competitive rates
- Review regularly: Adjust your contributions if your income changes
- Break down big goals: Several small objectives are more motivating than one giant one
- Celebrate milestones: Every 25% reached is a victory
Frequently Asked Questions
The calculator determines how much you need to save each month to reach your financial goal within the specified timeframe, considering the interest you'll earn on a savings account or investment.
The higher the interest rate, the less you need to contribute each month because your savings grow faster thanks to compound interest.
If you enter an amount in "Current Savings", the calculator considers it as a starting point. This will reduce the monthly amount you need to save to reach your goal.