Monthly savings calculator

The monthly amount you need to save to hit a goal by a date — or what a set monthly deposit grows to. Real APYs, monthly compounding, and the tax the bank calculators leave out.

How the math works

Your deposits form an ordinary annuity, and your starting balance compounds on its own. Both grow at the monthly rate. The future value of the two together is:

Where FV is the goal, PV is your current balance, PMT is the monthly deposit, i is the monthly rate (the annual rate divided by 12), and t is the number of months. To find the monthly amount, the calculator rearranges the formula and solves for PMT. To find what a fixed deposit grows to, it solves for FV.

The rate compounds monthly, which is the convention for savings accounts. Whether an account credits interest daily or monthly changes the answer by pennies over a two-year goal, so this calculator uses the simpler monthly convention and does not pretend the choice is a real decision.

Worked example

Take a renter with $3,200 a month in essential expenses building a three-month emergency fund — a $9,600 goal. They start from $0 and want it done in 24 months, in a high-yield savings account paying 4.00% APY.

Without interest, the answer is exactly $400 a month. With 4.00% APY compounding monthly, the deposit drops to $384.88. Over 24 months that's $9,237.10 of deposits and $362.90 of interest doing the rest of the work.

Now switch the account to the FDIC national average savings rate of 0.41% APY — what a brick-and-mortar "savings" product typically pays. The required deposit rises to $398.43. So a ten-fold difference in the rate changed the monthly number by $13.55. On a two-year goal, the account you pick barely moves the deposit. On a twenty-year goal, it moves everything.

When this calculator is wrong

The banks running the top-ranking versions of this calculator quote a pre-tax rate and stop there. Interest in an ordinary savings account is taxed as regular income. At a 22% marginal bracket, the 4.00% APY the calculator shows really compounds like 3.12% after tax — the widget above spells that figure out under the result. The tax vanishes inside a Roth IRA, an HSA, or a 529, and it is smaller at short horizons, but on a taxable balance it is real money the pre-tax number hides.

Other ways the number above misleads:

• It assumes the deposit never changes. Most savers raise the amount as income grows, so a flat monthly figure is usually a pessimistic plan for anything past a year or two.
• It assumes a fixed APY. High-yield rates track the Fed. If rates get cut, the account cutting them will need a slightly larger deposit to stay on schedule.
• It ignores inflation. A $9,600 goal hit in two years is worth a little less, in real terms, than $9,600 today. Trivial at two years, decisive at twenty.
• The rate matters far less than the layout implies. The APY input sits next to the goal as if it were an equal lever. For a short-horizon goal it is not: the money comes almost entirely from your deposits, not the interest.

What to do with the result

If the monthly number is affordable, the useful next move is not chasing another tenth of a point of APY — on a short goal that is worth a few dollars a month. It is making sure the money sits somewhere paying a real rate at all. The gap between the 0.41% national average and a 4.00% online account is where the interest actually lives, and it compounds into something once the horizon stretches past a few years.

If the monthly number is not affordable, you have three levers: lower the goal, lengthen the timeline, or add a starting balance. Lengthening the timeline is usually the gentlest — stretching a goal from 24 to 30 months cuts the deposit by roughly a fifth, and the interest does slightly more of the work the longer the money sits.

Common questions

How much should I save each month?

There is no universal figure — it depends on the goal and the deadline. Enter both above and the calculator returns the exact monthly deposit. For a rule of thumb instead of a specific goal, the U.S. personal saving rate runs about 4.5% of income, and savers targeting financial independence often aim far higher.

Does the interest rate change how much I need to save?

Less than you would think on a short goal. Moving the rate from 0.41% to 4.00% on a 24-month, $9,600 goal changes the deposit by $13.55 a month. The rate starts to dominate only once the horizon runs into many years, because interest compounds on interest.

Should I use my current balance in the calculation?

Yes, if it is earmarked for the same goal. A starting balance compounds on its own and lowers the monthly deposit. Money you are unwilling to spend on this goal should be left out.

Is the monthly amount before or after tax on the interest?

The deposit is money you set aside, so tax does not touch it. Tax touches the interest the balance earns. At a 22% bracket a 4.00% APY compounds like 3.12% after tax, which slightly raises the deposit needed on a taxable account. Inside a Roth IRA, HSA, or 529 there is no such drag.