Why use this calculator
A savings goal without a monthly number attached is a wish. Converting a target and a deadline into a specific amount per month is what makes it actionable, and it frequently reveals that the deadline is the problem rather than the discipline. The same goal over eight years instead of five can be comfortably affordable.
This calculator also credits the interest your existing balance earns, which for larger goals over longer periods does a meaningful share of the work. Seeing that portion separately helps with the decision about where to keep the money, since the right account depends far more on when you need the cash than on the headline rate.
How to use it
- Enter the total you need and what you have already set aside for it.
- The return rate should reflect where the money will actually sit: a high-interest savings account, a term deposit, or nothing at all if it is in a transaction account, in which case enter zero.
- Set the timeframe in years, using decimals for part years.
- If the monthly figure looks impossible, extend the timeframe before abandoning the goal.
- The relationship is close to inverse, so doubling the time roughly halves the monthly amount.
What each result means
- Your savings will grow to
- What the money you already have becomes by the deadline at this interest rate, with nothing more added. It appears when that alone reaches the goal.
- Surplus above the goal
- How far your existing savings overshoot the goal by the deadline, money you could put toward another goal or spend without missing this one.
- Monthly saving needed
- The amount to transfer every month to hit the target exactly on time. Automating it on payday is what makes it happen.
- Weekly equivalent
- The same commitment expressed weekly, which is easier to judge against a weekly pay cycle.
- Your goal
- The target amount you entered, repeated here so it sits beside the projected balance without scrolling back up.
- Existing savings will grow to
- What you already have, compounded to the deadline. It reduces the amount you need to save.
- Still to be saved
- The gap between your goal and what existing savings will grow to. The amount your monthly contributions have to close.
- Total you will contribute
- Existing savings plus all future deposits: the money that comes from you, excluding any interest earned.
- Interest earned along the way
- The share of the goal funded by returns rather than by you. It grows sharply with longer timeframes.
The formula
Existing savings are grown first:
FV = PV × (1 + r)ⁿ
The shortfall is the goal minus that future value.
The monthly contribution needed to close it comes from the future value of an annuity rearranged for payment:
PMT = shortfall × r ÷ [(1 + r)ⁿ − 1]
When the rate is zero this reduces to the shortfall divided by the number of months.
How this number is used in practice
Automating the transfer on payday is the single change that most reliably works. Saving what is left at the end of the month depends on discipline every month; saving first and spending the remainder depends on it once. The behavioural literature on this is unusually consistent.
Where the money sits should follow the timeframe. Money needed within about three years belongs in a high-interest savings account or term deposit, because a market fall right before the deadline cannot be waited out. Money not needed for five or more years can reasonably take investment risk.
For a house deposit specifically, remember the goal is larger than the deposit itself. Stamp duty, conveyancing, inspections and moving costs are cash on top, and they routinely add tens of thousands. Setting the goal at the deposit alone is the most common way people arrive at settlement short.
Worked examples
$50,000 in 5 years with $5,000 saved at 4.5%
About $680 a month, or roughly $157 a week. Interest funds close to $4,500 of the total.
The same goal over 8 years instead of 5
Drops to about $380 a month. Extending the deadline is the most effective lever available.
$20,000 emergency fund in 2 years from nothing at 4.5%
About $797 a month, with interest contributing only a few hundred dollars over such a short period.
When people use it
- Planning a house deposit with a realistic monthly target
- Building an emergency fund by a set date
- Saving for a car, a wedding or a trip without borrowing
- Checking whether a savings goal is achievable before committing to it
- Comparing how much a longer timeframe reduces the monthly commitment
Tips
- Automate the transfer for the day you are paid. Saving what is left at month end almost never works.
- Extending the deadline is the strongest lever. Doubling the timeframe roughly halves the monthly amount.
- Keep goal money in a separate account from spending money. Visibility of the balance is what protects it.
- Money needed within three years should not be invested in shares; a fall right before the deadline cannot be waited out.
- For a house deposit, add stamp duty, conveyancing and moving costs to the goal. They are cash on top of the deposit.
- Review the target when your income changes. Increasing the transfer with a pay rise is painless; doing it later is not.
What it assumes, and where it stops being accurate
- Contributions are made at the end of each month and never missed.
- The return rate is constant and applies to the whole balance, including new contributions from the month they are made.
- Tax on interest earned is not deducted, which matters for larger balances in taxable accounts.
- Inflation is ignored, so a goal set in today's dollars will buy less by the deadline.
- Account fees and any withdrawal penalties on term deposits are excluded.
Terms used on this page
- Future value
- What an amount grows to after a period of compounding.
- Annuity
- A series of equal payments made at regular intervals. The structure behind a regular savings plan.
- Emergency fund
- Accessible savings covering several months of essential expenses, held to avoid borrowing in a crisis.
- Term deposit
- A fixed-rate deposit locked for a set period, usually paying more than an at-call account.
Questions people ask
- How much should I save each month?
- Enough to reach your target by your deadline, which this calculator works out exactly. As a general guide, twenty per cent of take-home pay toward savings and debt repayment is a widely used benchmark, but a specific goal with a specific date produces a far more useful number than a percentage rule.
- Where should I keep my savings?
- Match the account to the timeframe. Money needed within three years belongs in a high-interest savings account or term deposit where the balance cannot fall. Money not needed for five or more years can reasonably be invested, accepting that it will fluctuate along the way.
- What if I cannot afford the monthly amount?
- Extend the timeframe first, since the relationship is close to inverse. Eight years instead of five cuts the monthly figure by nearly half. Then consider reducing the goal, or increasing income. Setting a target you cannot meet and abandoning it in month three is worse than a slower plan you actually finish.
- Should I save or pay off debt first?
- Build a small emergency buffer of around $2,000 first, then clear any debt costing more than your savings rate, then resume saving. Paying down a credit card at twenty per cent is a guaranteed twenty per cent return, which no savings account will match.
- Does this account for inflation?
- No. The goal is in today's dollars and the projection is in future dollars, so a target set five years out will buy somewhat less than it would today. For long-horizon goals, either inflate the target or subtract your inflation assumption from the return rate to see the result in real terms.
Use this with
Savings Goal Calculator answers one part of the question. These pick up where it stops: Compound Interest Calculator, Emergency Fund Calculator, Budget Planner Calculator and Home Affordability Calculator.
Where these figures come from
This calculation is jurisdiction-neutral arithmetic. No country-specific rules are applied.
- ASIC Moneysmart: how to invest. Independent guidance on returns, risk and fees
- Reserve Bank of Australia: indicator lending rates. Published lending and deposit rates
Savings Goal Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.