SAVINGS

Savings Goal Calculator

Setting a savings goal, such as a house deposit, a car or a holiday, is easier when you know the target amount and the date you want to reach it by. This calculator shows how much you still need to save, how long it will take at the amount you can save each month, and how much interest from your savings account helps you get there.

How to use this savings goal calculator

1. Enter the savings goal amount, the full cost of what you are saving for: a house deposit, a car, a wedding or a holiday. Use a real price you have looked up rather than a round guess, and add a little for fees or extras if they apply.
2. Enter your current savings towards this goal, from the balance of the account you keep the money in.
3. Enter the amount you can save each month. Your budget shows what is realistically left after essentials and other commitments, and an amount you can keep up every month beats a bigger one you abandon.
4. Enter your savings account APY, which your bank shows on the account page or statement.
5. Press Calculate. You will see the goal amount, how much you still need, the months to reach the goal, an approximate goal date, the total you will save out of your own pocket, and the total interest earned along the way.

A worked example

Say you are saving for a car that costs $12,000 and you already have $2,500 set aside.

You still need $9,500. You can save $350 a month, and the money sits in an account paying 4.5% APY. Month by month the balance grows by your deposit plus interest on what is already there, and you reach the goal in 26 months. The results also show the approximate goal date, the month and year those 26 months land on.

Over the 26 months, the total you will save yourself is $9,100. Interest adds $695 on top, which is money you did not have to earn or find room for in your budget. On a short goal like this the interest is a bonus rather than the main engine, but it still covers a real chunk of the car’s cost, roughly the first set of tires.

The Federal Deposit Insurance Corporation offers free money management resources for savers.

Related calculators

• Savings Calculator: see how regular deposits and interest grow a savings account balance over time.
• APY Calculator: turn a savings account rate into its true annual yield, with compounding included.
• Emergency Fund Calculator: work out how many months of expenses to set aside and how long the fund will take to build.
• CD Ladder Calculator: plan savings across a set of CDs with staggered maturity dates instead of one account.

How this savings goal calculator works

A savings goal works best when it has a specific amount and a deadline. Decide what you are saving for, what it will cost and when you need the money by, then work backwards to find the monthly amount that gets you there in time.

This calculator starts with how much you still need: your goal minus what you have already saved. It then adds your monthly saving month by month, adding interest each month at your savings account APY divided by twelve, until the balance reaches your goal or 600 months have passed. The results show how many months that takes, the approximate date you should reach it, the total you will pay in yourself and the total interest that helps you.

The practical way to fund a goal like this is a sinking fund: saving a set amount each month for a known future cost, such as a car, a wedding or a holiday. Because the cost and the date are known in advance, small regular amounts can build up in time, instead of the whole bill landing on one month’s income or on a credit card.

Practical tips

• Automate the transfer on payday. Set up an automatic transfer to your savings account for the day your income arrives, so the money moves before you can spend it and saving happens without willpower.
• Keep each big goal in its own named savings account. A separate account named for the goal, such as House deposit or Holiday, makes your progress visible and stops different goals getting mixed up or spent by accident.
• Send windfalls and bonuses to the goal. Put at least part of any bonus, tax refund or unexpected extra income straight into the goal account, and your target date will move closer without changing your monthly budget.
• Review the monthly amount whenever your income changes. If your pay rises, increase the transfer by a little; if it falls, reduce it rather than stopping altogether, so the habit and the progress continue.

Frequently asked questions

How much should I save each month?

Work backwards from your goal and your deadline: take the amount you still need and divide it by the number of months until you need it. As a starting point, the 50/30/20 budget rule suggests putting around 20% of your after-tax income towards saving and paying off debt, then adjusting that share to fit your goal and your other commitments.

What is a sinking fund?

A sinking fund is money you save in small, regular amounts for a specific cost you know is coming, such as a car, a wedding, a holiday or annual bills. By saving a set amount each month in advance, you spread the cost over time and can pay it in full when it arrives instead of borrowing.

Should I invest the money for a savings goal?

For goals you need within about three years, keep the money in a savings account where its value will not fall just before you need it. Investing is better suited to longer-term goals, where there is time for short-term falls in value to recover before the money is spent.

How do I stay motivated while saving?

Track your progress visually, for example with a chart on the fridge or the balance of a named savings account you check each month. Celebrate milestones along the way, such as reaching a quarter or half of your goal, and keep the goal visible so everyday spending choices are easier.