Savings Goal Calculator
Savings Goal Calculator
How much to put aside each month to reach a savings target by a date, with the target raised for inflation, and what waiting a year would cost you.
Monthly saving needed
A target of $10,00,000 in today’s money, 5 years away, 4% inflation, savings earning 7%
The monthly saving for a target
- T
- the target in future money
- S
- what you have already saved
- f
- inflation on the goal, as a decimal
- i
- the monthly rate: annual rate ÷ 12 ÷ 100
- n
- the number of monthly deposits: years × 12. Starting a year later means n − 12 deposits to the same date.
Worked example
A target of $10,00,000 in today's money, 5 years away, 4% inflation, savings earning 7%
Target in 5 years = 10,00,000 × 1.045 = $12,16,653
i = 7 ÷ 1200 = 0.005833; n = 60; (1 + i)60 = 1.4176
P = 12,16,653 × 0.005833 ÷ (1.4176 − 1) ÷ 1.005833 = $16,895 a month
You deposit $10,13,729; interest adds $2,02,924
Start a year later and it is $21,909 a month for 48 months
Monthly saving for 10,00,000 in today’s money, 4% inflation, 7% interest
| Years | Target then | Monthly saving | If you start a year later |
|---|---|---|---|
| 3 years | $11,24,864 | $28,007 | $43,547 |
| 5 years | $12,16,653 | $16,895 | $21,909 |
| 10 years | $14,80,244 | $8,503 | $9,820 |
| 15 years | $18,00,944 | $5,649 | $6,304 |
How the monthly figure is worked out, and what it leaves out
The calculator first turns your target into future money: at 4% inflation, something that costs $10,00,000 today costs about $12,16,653 in five years. It then finds the level monthly deposit that, with interest added every month, reaches that figure on the day you need it. Anything you have already saved is grown at the same rate and taken off first. Without the inflation step the example would ask for $13,887 a month instead of $16,895 — a plan that looks on track and falls short.
Waiting has a price. Starting a year later leaves 48 deposits instead of 60 to reach the same target, so each one has to be larger: $21,909 rather than $16,895. The shorter the horizon, the bigger that jump, as the table shows.
The interest rate is the assumption that matters most. Deposit rates change, and interest is usually taxable, so enter a rate after tax if yours is. For a short, fixed goal a recurring deposit is the natural match for this arithmetic; the RD calculator shows how a bank computes one, with quarterly compounding. A goal many years away is often saved for in market-linked funds instead, where the return is not guaranteed; the SIP goal calculator works that way round. The chart shows your balance, the money you put in and the target line; the gap between the first two is interest. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How much should I save each month to reach my goal?
Raise the target for inflation, then find the monthly deposit whose future value matches it. For $10,00,000 in today’s money in 5 years, 4% inflation and 7% interest, it is about $16,895 a month.
What happens if I start a year later?
You have 12 fewer deposits to reach the same target, so each must be larger. In the example the monthly figure rises from $16,895 to $21,909.
Should I include inflation?
Yes, unless the target is already a fixed future amount. Ignoring it makes the monthly figure too low.
Does the calculator include tax on the interest?
No. If the interest will be taxed, enter the rate after tax, for example 7% × (1 − your tax rate).
Related calculators
References
- Brealey RA, Myers SC, Allen F. Principles of Corporate Finance. McGraw-Hill. Compound interest, effective annual rates, continuous compounding and the future value of an annuity.
- Central-bank inflation targets used as default inflation by currency: Reserve Bank of India (4% CPI, flexible inflation targeting framework); U.S. Federal Reserve (2% PCE); European Central Bank (2%); Bank of England (2% CPI); Bank of Canada (2%); Reserve Bank of Australia (2–3%); Bangko Sentral ng Pilipinas (3% ± 1). Actual inflation often runs above target.