Does this assume contributions at the start or end of the month?

End of month, the standard ordinary annuity convention. Contributing at the start of each month earns one extra month of interest and reduces the required amount slightly.

What rate should I use?

For a short horizon use the rate on the account you will actually hold. For long horizons, a conservative real return assumption is safer than an optimistic nominal one.

What if I cannot save that much?

Either extend the horizon or lower the target. Extending is usually more effective because it reduces the monthly amount more than proportionally.

Savings Goal Calculator

Quick answer

The monthly amount needed equals the target multiplied by the monthly rate, divided by ((1 + monthly rate) raised to the number of months, minus one). With no interest it is simply target ÷ months.

Monthly amount to hit a target

Target amount

Months to save

Annual interest rate (%)

Save per month

531.62

Without any interest

555.56

Interest does the work

861.53

Contributions assumed at the end of each month. Interest is nominal — subtract inflation to see the real value of the target.

Saving towards a target is the mirror image of paying off a loan: a fixed monthly payment, a compounding rate, and a balance that moves towards a known number. The same annuity formula drives both.

Interest helps less over short horizons than people expect. Over two years at 3 per cent it changes the required monthly amount by only a few per cent; over twenty years it changes it enormously.

Why time matters more than rate

Doubling the saving period more than halves the monthly amount needed, because both the number of contributions and the compounding work in your favour. Doubling the interest rate on a short horizon barely moves the figure.

This is the practical argument for starting early with a small amount rather than waiting to start with a large one. The gap between the two strategies is almost entirely a function of elapsed time.

Inflation and the real target

A target set today in today's money will buy less by the time you reach it. Over ten years at 3 per cent inflation, a goal needs to be roughly 34 per cent larger in nominal terms to have the same purchasing power.

If the goal is a specific purchase with a known price trajectory — a property deposit, a car — index the target rather than the contribution. Raising the target is easier to reason about than adjusting the monthly amount every year.

Frequently asked questions

Does this assume contributions at the start or end of the month?: End of month, the standard ordinary annuity convention. Contributing at the start of each month earns one extra month of interest and reduces the required amount slightly.
What rate should I use?: For a short horizon use the rate on the account you will actually hold. For long horizons, a conservative real return assumption is safer than an optimistic nominal one.
What if I cannot save that much?: Either extend the horizon or lower the target. Extending is usually more effective because it reduces the monthly amount more than proportionally.

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Updated 2026-09-20 · all calculators. Results are estimates for guidance, not professional advice.