Working backward from a goal
Two things fill a savings goal: money you have now, which grows on its own, and the deposits you make from here on, which grow for less and less time the later they go in. The calculator first projects your current savings to the target date, then finds the level monthly deposit whose future value covers the rest. Interest is compounded monthly at the annual rate divided by 12, and each deposit is made at the end of the month.
The formulas
r = annual rate / 12, n = years × 12 Current savings at the goal date: FV₀ = S × (1 + r)^n Monthly deposit: PMT = (Goal − FV₀) × r / ((1 + r)^n − 1) At 0% interest: PMT = (Goal − S) / n
Worked example
Goal $30,000 in 5 years, with $5,000 saved and 4% interest. r = 0.04 / 12 = 0.003333, n = 60, and (1.003333)^60 = 1.22100.
The $5,000 grows to $6,104.98, leaving $23,895.02 to cover. PMT = 23,895.02 × 0.003333 / 0.22100 = $360.41 a month. You deposit $21,624.78 in total, and interest supplies the remaining $3,375.22.
Limitations
- The rate is assumed constant; savings rates change and investment returns are not guaranteed.
- Taxes on interest are ignored. In a taxable account, interest is ordinary income each year.
- The goal is in future dollars — it is not adjusted for inflation.
Sources: U.S. Securities and Exchange Commission, Investor.gov, Savings Goal Calculator; FDIC, National rates and rate caps.
Frequently asked questions
What interest rate should I use?
Use the APY your savings account or CD pays today for short goals (under three years), since that money should not be in the stock market. For goals ten years or more away invested in a diversified fund, people often plan with a conservative 4–6% a year, knowing returns vary and can be negative in any year.
How is this different from the compound interest calculator?
The compound interest calculator starts from a deposit and tells you where you will end up. This one starts from where you want to end up and works backward to the monthly deposit you need. The math is the same future-value formula, solved for the payment.
What if I already have enough?
If your current savings will grow past the goal by the target date on interest alone, the calculator says so and the monthly deposit needed is $0.
Should I adjust the goal for inflation?
For goals many years out, yes. A $30,000 car in today's prices will cost more in ten years. Use the inflation calculator to see how prices have changed historically, or raise the goal by an assumed inflation rate — or plan with a "real" return (your expected return minus inflation) in today's dollars.
CalcNest results are estimates based on the inputs and assumptions above, not financial, tax or lending advice. A lender's official Loan Estimate or your account statement is the final word.