Savings Goal Calculator 🌎

What is a savings goal?

A savings goal is a specific financial target you aim to reach by setting aside money regularly over a defined period. It combines your initial balance, monthly contributions, and investment returns to calculate the total amount accumulated. For example, saving $20,000 in 24 months requires approximately $745 monthly at 4.5% APY, accounting for earned interest.

How It Works

This calculator uses the future value of an annuity formula, solved for the periodic payment (PMT). It accounts for both the growth of your existing balance and the compounding of each new monthly deposit.

Formula

r  = APY / 12 / 100          // monthly interest rate
n  = months                  // number of periods

// Future value of current balance after n months:
FV_existing = PV × (1 + r)^n

// Remaining gap to fill with monthly deposits:
Gap = FV − FV_existing

// Monthly payment needed (annuity PMT formula):
If r > 0:
  PMT = Gap × r / ((1 + r)^n − 1)
If r = 0:
  PMT = Gap / n

When the APY is 0%, the formula simplifies to dividing the gap equally across all months.

Worked Example

Step 1 — Monthly rate: 4.5 / 12 / 100 = 0.00375

Step 2 — Growth of existing balance: $2,000 × (1.00375)^24 = $2,184.89

Step 3 — Gap: $20,000 − $2,184.89 = $17,815.11

Step 4 — PMT: $17,815.11 × 0.00375 / ((1.00375)^24 − 1) ≈ $744.99/month

Step 5 — Total contributed: $744.99 × 24 + $2,000 = $19,879.76

Step 6 — Interest earned: $20,000 − $19,879.76 = $120.24 (note: slight rounding)

Outputs Explained

Limitations & When NOT to Apply