How to calculate a savings goal
Work backwards from the target and date. Divide the shortfall by the number of months, then reduce it slightly if the money will earn interest along the way.
The rule
Monthly saving = (target − current savings) ÷ months, adjusted downwards for expected interest
Do it automatically — Savings goalStep by step
- 1Set a specific target amount and target date.
- 2Subtract what you have already saved to get the shortfall.
- 3Divide by the number of months remaining.
- 4If you will earn interest, reduce the monthly figure using the future-value of a regular contribution.
What trips people up
- • Goals under five years should stay in cash — market volatility can wreck a short timeline.
- • Automating the transfer on payday is the single biggest predictor of hitting the target.
Common questions
Should I save or invest for this?
Cash for under five years, invested for longer horizons.
How big should an emergency fund be?
Three to six months of essential spending is the common benchmark.
Skip the maths
Work out the monthly contribution to hit a target on a chosen date.
Open the monthly savings needed tool