Last updated: 2026-05-19

The savings goal calculator

A savings goal calculator determines the fixed monthly deposit required to accumulate a specific target amount by a given date, given an opening balance and a constant interest rate compounded monthly. It combines the lump-sum compound-interest formula (to project the starting balance forward) with the sinking-fund formula (to cover the remaining gap with equal monthly payments).

How the calculation works

The calculator combines two standard finance formulas. First, it projects the starting balance forward using the compound-interest formula to find how much it will grow to by the end of the timeline:

Starting balance at maturity = Opening balance × (1 + monthly rate)^(months)

Whatever gap remains between that projected value and the goal is then filled by equal monthly deposits — a "sinking fund" in finance terminology:

Monthly contribution = Remaining gap × monthly rate / ((1 + monthly rate)^months − 1)

When the opening balance is already projected to meet or exceed the goal on its own, the required monthly contribution is zero.

Worked example: saving for a home down payment

Consider a goal of $60,000 for a down payment in 5 years, with $12,000 already saved in a high-yield savings account earning 4.5% annually.

1. Monthly rate: 4.5% ÷ 12 = 0.375%
2. Months: 5 × 12 = 60
3. Starting balance at maturity: $12,000 × (1.00375)^60 ≈ $15,022
4. Remaining gap: $60,000 − $15,022 = $44,978
5. Required monthly contribution: $44,978 × 0.00375 / ((1.00375)^60 − 1) ≈ $670

Over five years the deposits total about $40,200. The remaining $7,818 — roughly 13% of the goal — arrives as compound interest, the equivalent of about 12 months of extra deposits.

Compound interest on the starting balance

A simpler approach would treat the opening balance as a static offset, subtracting it from the goal before applying the monthly formula. That understates how much the existing balance does, because it ignores the interest the balance itself earns over the term. At 4.5%, $12,000 grows by over $3,000 in five years — an amount that would otherwise require five extra months of monthly deposits. The higher the rate and the longer the horizon, the larger this effect becomes.

This is why early contributions carry the most weight: a dollar present at the beginning compounds for the entire term, while a dollar added in month 58 compounds for only two months.

Choosing a realistic interest rate

The most accurate projection uses the rate of the actual account where the funds will be held:

• High-yield savings accounts (HYSA): 3–5% in typical rate environments, but rates reset with central bank policy.
• Money-market funds: Similar range to HYSAs, slightly variable.
• Certificates of deposit (CDs): Can lock in a guaranteed rate for 6–24 months; useful for goals 1–3 years out.
• Cash / checking: 0–0.5%. Use 0% to find the worst-case monthly requirement.

For goals under five years, equity-like returns (7–10%) are an unreliable assumption. Stock markets can decline 30–50% in the short term, and a time-sensitive goal leaves no room to wait out a recovery.