Saving towards a number
Most saving advice starts with what you can spare. This works the other way round: start with the amount you need and the date you need it, and the monthly deposit falls out of it. That makes a goal something you can either commit to or deliberately move, instead of something you hope adds up.
Formula
Monthly deposit = (goal − start × (1 + i)ⁿ) × i ÷ ((1 + i)ⁿ − 1)i = yearly rate ÷ 12 ÷ 100,n = number of months
Worked example
You want 500,000 in three years and your savings account pays 6%. Starting from nothing, you need 12,711 a month. Your own deposits come to 457,595 and interest quietly supplies the other 42,405 — more than three months of deposits, for free.
How to use the savings goal calculator
- Enter the target and how many months you have.
- Enter the interest your account or scheme pays. Leave it at 0 if the money just sits.
- Add what you have already put aside — it grows too, and lowers the monthly figure.
Making the plan stick
- If the monthly number is uncomfortable, change the date rather than abandoning the goal. Six more months usually makes it manageable.
- Set the deposit to leave your account the day your salary arrives. A goal that depends on what is left at month-end rarely gets there.
- For goals more than five years away, remember that prices move too — check the inflation calculator and aim a little higher.
Frequently asked questions
How much should I save each month?
Enough that the deposits plus the interest reach your target by the date you set. Enter the goal, the months and your interest rate above and the calculator gives the exact figure.
Does the interest rate make much difference?
Over a short goal, very little. Over ten years or more it does a large part of the work, which is why long goals belong somewhere that actually pays interest.
What if I already have some money saved?
Enter it in the optional field. It keeps earning interest for the whole period, so the monthly deposit you need drops by more than the amount itself.