About the Savings Goal Calculator
This savings goal calculator answers the two questions behind every savings plan: how much do I need to save per month to reach a target by a certain date, and how long will it take if I can save a fixed amount each month. It works for an emergency fund, a house down payment, a car, a wedding or college. It includes the money you have already saved and monthly compound interest, and shows the balance year by year.
How to use
- Choose Monthly saving or Time to goal.
- Enter your savings goal, what you have saved so far and the expected annual interest rate (use 0 for a checking account).
- Enter the time frame in years, or the amount you can deposit each month.
- Check the yearly table to see deposits, interest and progress toward the goal.
The formula
With monthly rate r = annual rate รท 12, n months, current savings I and goal T, the required end-of-month deposit is:
PMT = (T โ I ร (1+r)โฟ) ร r รท ((1+r)โฟ โ 1)
Example: to grow $5,000 into $50,000 in 5 years at 4%, you need to save about $662.08 a month. Saving $500 a month instead gets you there in 6 years and 5 months (77 months).
Monthly savings needed for $50,000
Starting from $0.
| Time frame | At 4% APY | At 0% |
|---|---|---|
| 3 years | $1,309.53 | $1,388.89 |
| 5 years | $754.16 | $833.33 |
| 10 years | $339.56 | $416.67 |
The longer the time frame, the more of the goal is covered by interest instead of your own deposits.
Tips for reaching a savings goal
- Set up an automatic transfer on payday so the saving happens before you can spend it.
- Keep short-term goals (under 3โ5 years) in FDIC-insured savings, money market accounts or CDs rather than stocks.
- Interest from savings is taxed as ordinary income; to be conservative, enter an after-tax rate.
- Recalculate when your rate changes or you receive a windfall: enter the new balance as current savings.
FAQ
How much do I need to save a month to have $10,000 in a year?
Without interest, $833.33 a month. At 4% APY itโs about $818 a month, because the deposits earn a little interest along the way.
How long does it take to save $50,000 at $500 a month?
Starting from zero at 4% interest it takes 87 months (7 years 3 months). Without interest it takes 100 months.
Which interest rate should I enter?
Use the APY of your savings account or CD. For an investment account use a conservative long-term return, since returns are not guaranteed. Enter 0 to see the result without interest.
Does the calculator include taxes or inflation?
No. Enter an after-tax rate if you want to include taxes, and remember that a goal 10 years away will buy less than it would today; the inflation calculator can show how much.