How much should you save each month to reach a goal?

Start with three inputs

Define the target amount, the number of months available and a prudent expected annual return. A compound-growth projection does not guarantee that return; it only shows the contribution required if the assumptions hold.

Monthly savings formula

With no starting balance and contributions at the end of each month:

monthly contribution = target x i / ((1 + i)^m - 1)

i is the monthly rate as a decimal and m is the number of months. A simple monthly conversion of a 6% nominal annual rate is 0.06 / 12 = 0.005.

If you already have savings:

monthly contribution =
(target - initial balance x (1 + i)^m) x i / ((1 + i)^m - 1)

Example with no starting balance

To reach $100,000 in five years at a hypothetical 6% annual rate:

target = 100000
i = 0.06 / 12 = 0.005
m = 5 x 12 = 60

monthly contribution = 1433.28

You would need to contribute about $1,433.28 a month. A lower actual return would require a higher contribution or a longer term.

Example with an initial balance

If you already have $20,000 under the same assumptions:

monthly contribution =
(100000 - 20000 x (1 + 0.005)^60) x 0.005 / ((1 + 0.005)^60 - 1)

monthly contribution = 1046.62

The estimated monthly requirement falls to $1,046.62 because the existing balance both reduces the gap and has time to grow.

A no-return plan

For a conservative plan that assumes no return:

monthly contribution = target / months
100000 / 60 = 1666.67

With $20,000 already saved:

(100000 - 20000) / 60 = 1333.33

This version does not rely on investment performance to reach the target.

Adjust a future goal for inflation

If the item you plan to buy may become more expensive, first estimate its future cost:

future target = current cost x (1 + inflation rate)^years

Then use that future target in the contribution formula. Read inflation and compound interest to distinguish nominal amounts from purchasing power.

The savings goal calculator can solve for either the monthly contribution or the time needed. It also provides a no-return comparison and adjusts the final payment to avoid unnecessary overfunding.

Frequently asked questions

How do I calculate monthly savings without an assumed return?

Subtract any existing balance from the goal, then divide the remainder by the number of months.

Should I include inflation?

Yes, when the goal is tied to a good or service whose price may rise before you buy it.

What if I contribute at the beginning of each month?

Each deposit has one extra month to grow, so the required contribution may be slightly lower than the end-of-month formula suggests.