How to use the savings calculator
Choose one of two modes:
- Future value shows where your savings will end up. Enter an initial deposit, a monthly contribution, the annual interest rate, how often interest compounds and the number of years. You can also add a yearly contribution increase, for example 3% if you plan to save a little more each year as your income grows.
- Savings goal works backwards from a target. Enter the amount you want to reach, any initial deposit, the rate, the compounding and the number of years, and the calculator shows the monthly contribution you need.
Press Calculate to see the final balance, total deposits and total interest. The table below lists each year's monthly deposit, the deposits and interest for that year and the ending balance.
How it differs from the compound interest calculator
The compound interest calculator focuses on how a balance grows at different compounding frequencies. This savings calculator is built around a monthly saving habit: deposits that rise each year and goals you want to hit by a certain date.
The method
Contributions are made at the end of each month. When interest compounds monthly, the monthly rate is the annual rate divided by 12. For other frequencies the calculator first finds the effective annual rate, EAR = (1 + r / n)^n − 1, and then the equivalent monthly rate, i = (1 + EAR)^(1/12) − 1. This keeps the yearly growth exactly in line with the compounding you chose. At 4% compounded quarterly, for example, the EAR is 4.0604% and the monthly rate is about 0.3322%.
The required contribution for a goal is C = (goal − P × (1 + i)^N) × i / ((1 + i)^N − 1), where P is the initial deposit and N the number of months. It is rounded up to the next cent so the goal is always reached.
Worked example
Saving 100 a month for 10 years at 6% compounded monthly gives 100 × ((1.005^120 − 1) / 0.005) = 16,387.93. You deposit 12,000, and 4,387.93 is interest.
To reach 20,000 in the same 10 years from nothing, you need 20,000 × 0.005 / (1.005^120 − 1) = 122.041, rounded up to 122.05 a month. Because of the rounding, the balance ends slightly above the goal at 20,001.47.
Good to know
- The rate is assumed to stay the same for the whole period. Taxes, fees and inflation are not included, so treat the results as estimates.
- If your initial deposit alone grows past the goal, the required monthly contribution is zero.
- Starting earlier usually matters more than saving a larger amount later, because early deposits earn interest for longer.