Savings Goal Calculator Formula
Understand the math behind the savings goal calculator. Each variable explained with a worked example.
Formulas Used
Monthly Deposit Needed
monthly_deposit = monthly_rate > 0 ? remaining / ((pow(1 + monthly_rate, months) - 1) / monthly_rate) : (goal_amount - current_savings) / monthsTotal You Will Deposit
total_deposits = monthly_rate > 0 ? remaining / ((pow(1 + monthly_rate, months) - 1) / monthly_rate) * months : (goal_amount - current_savings)Interest Earned
interest_earned = goal_amount - current_savings - (monthly_rate > 0 ? remaining / ((pow(1 + monthly_rate, months) - 1) / monthly_rate) * months : (goal_amount - current_savings))Variables
| Variable | Description | Default |
|---|---|---|
goal_amount | Savings Goal(USD) | 10000 |
current_savings | Current Savings(USD) | 2000 |
months | Months to Goal(months) | 24 |
annual_return | Annual Return (savings account)(%) | 4 |
monthly_rate | Derived value= annual_return / 12 / 100 | calculated |
remaining | Derived value= goal_amount - current_savings * pow(1 + monthly_rate, months) | calculated |
How It Works
How to Plan Monthly Savings
This calculator accounts for compound interest on your existing balance and future deposits to determine how much to save each month.
Formula
Monthly Deposit = (Goal - Current x (1+r)^n) / [((1+r)^n - 1) / r]
Where r is the monthly interest rate and n is the number of months.
Worked Example
Save $10,000 in 24 months, starting with $2,000 at 4% annual return.
goal_amount = 10000current_savings = 2000months = 24annual_return = 4
- 01Monthly rate = 4% / 12 = 0.3333% (0.003333)
- 02Current savings will grow to: $2,000 x (1.003333)^24 = $2,165.57
- 03Remaining needed: $10,000 - $2,165.57 = $7,834.43
- 04Monthly deposit = $7,834.43 / [((1.003333)^24 - 1) / 0.003333] = $314.40
- 05Total deposited = $314.40 x 24 = $7,545.66
- 06Interest earned = $10,000 - $2,000 - $7,545.66 = $454.34
Ready to run the numbers?
Open Savings Goal Calculator