Savings Goal Calculator
How Much Should You Save Per Month?
How This Calculator Works
This calculator determines the monthly savings amount needed to reach a financial goal, accounting for compound interest on your contributions and existing savings. It uses the future value of an annuity formula, which calculates how regular deposits grow over time when they earn returns.
The calculator also shows your "safe withdrawal" amount — how much monthly income your goal amount could generate in perpetuity using the 4% safe withdrawal rate. This is useful for retirement and financial independence planning.
The Formula
Solving for PMT: PMT = (FV - PV(1+r)^n) × r / [(1+r)^n - 1]
- FV = Future value (your savings goal)
- PV = Present value (current savings)
- PMT = Monthly payment (what you need to save)
- r = Monthly interest rate
- n = Total number of months
Savings Tips
- Automate first, budget second — Set up automatic transfers to savings on payday. You can't spend what you never see in your checking account.
- Use the "1% more" strategy — Increase your savings rate by just 1% each month. You'll barely notice the difference, but over a year you'll be saving 12% more than when you started.
- Keep savings in a separate bank — Out of sight, out of mind. Having your savings at a different institution makes impulse withdrawals harder and often earns better interest rates.
- Round up your savings — When you buy something for $4.30, round up to $5 and save the $0.70. Many banks offer automatic round-up programs. It adds up to hundreds per year.
- Save your raises — When you get a pay raise, immediately redirect at least half of the increase to savings. You were living without it before, so you won't miss it.
Frequently Asked Questions
How much should I save per month?
A common guideline is the 50/30/20 rule: 50% of after-tax income for needs, 30% for wants, and 20% for savings and debt repayment. If you earn $5,000/month after taxes, aim to save at least $1,000. Increase this percentage if you have specific goals like a home down payment or early retirement.
What is the safe withdrawal rate?
The safe withdrawal rate (commonly 4%) is the percentage of your savings you can withdraw annually without depleting your funds over 30 years, based on historical market returns. For a $500,000 goal, a 4% SWR means you could withdraw $20,000/year ($1,667/month) indefinitely.
Should I save in a regular account or invest?
For short-term goals (under 3 years), use a high-yield savings account to avoid market risk. For medium-term goals (3-7 years), consider a mix of bonds and conservative funds. For long-term goals (7+ years), investing in a diversified stock portfolio historically provides the best returns.
How do I automate my savings?
Set up an automatic transfer from your checking account to your savings account on each payday. Treat savings like a bill that must be paid. Most banks allow you to set this up in your online banking. The key principle is 'pay yourself first' — save before you have a chance to spend.