How the monthly amount is found
Your current savings grow on their own with interest. The calculator subtracts that growth from your goal, then works out the level monthly deposit that covers the rest:
Deposit = (Goal − Saved × (1 + r)n) × r ÷ ((1 + r)n − 1)
r = annual rate ÷ 12 n = number of months
r = annual rate ÷ 12 n = number of months
If the interest rate is 0%, the answer is simply the remaining amount divided by the number of months.
Example
To reach $20,000 in 5 years starting with $2,000 in an account paying 4%, you would need to save about $265 a month. Over 60 months you deposit roughly $15,900, and interest supplies the remaining $2,100 or so.
Tips for reaching a savings goal
- Automate it. A transfer on payday means you save before you can spend.
- Use a separate account for each goal, such as an emergency fund or a house deposit, so the money is not mixed with everyday spending.
- Shop for the interest rate. High-yield savings accounts often pay noticeably more than standard ones, but rates change, so compare current offers.
- Change the timeline. Try a longer deadline to see how much the monthly amount drops.
Emergency fund first
A common target is three to six months of essential expenses in an easy-to-access account. Building that cushion before other goals means a surprise bill does not force you into debt. Interest rates on savings are variable, and taxes on interest are not included here.