Money tool
What does the goal actually take?
A deposit, a car, a year off. Name the amount and the date and this gives you the monthly figure — and what that amount will really be worth by the time you get there.
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- Method
- Future value of a regular contribution
- Your figures
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Leave this empty and the tool fills in what the goal requires.
Money needed within a couple of years belongs somewhere that cannot fall — use a savings rate for those.
What this assumes
- Contributions at the end of each month, and a steady return.
- No tax on the growth, and no charges.
- Inflation of 2.5% a year, for the real-value figure.
You would need
$341
a month, to reach $25,000 by October 2031
$20,564
You pay in
$4,436
Growth adds
$22,096
Target in today's money
$25,000 in 5 years buys about $22,096 of what money buys today, at 2.5% inflation. If the goal is a real thing rather than a round number, aim at what the thing will cost.
Year by year
What you will have paid in, and what it should be worth.
| Year | Paid in | Value |
|---|---|---|
| 1 | $4,113 | $4,261 |
| 2 | $8,225 | $8,864 |
| 3 | $12,338 | $13,834 |
| 4 | $16,451 | $19,202 |
| 5 | $20,564 | $25,000 |
Move the money on the day you are paid rather than at the end of the month. What survives to month end is whatever is left; what leaves on payday is whatever you decided.
A guide, not a quote. The return you enter is assumed to arrive evenly, which no real account does. It also ignores tax on interest, and what inflation will have done to the target by the time you reach it.
How this works
The monthly amount a target needs
target = current × (1 + r)^n + monthly × [((1 + r)^n − 1) / r]
- r — the assumed return divided by 12
- n — the number of months until the deadline
- The equation is solved for `monthly`: everything else is known
Two forces, pulling in the same direction
A savings goal is met by two things at once: what you put in, and what the balance earns while it sits there. The first term above grows whatever you already have; the second grows each monthly contribution for however long it has left.
That second part is why the same goal gets dramatically cheaper the earlier it starts. A contribution made in year one is working for the entire run; one made in the final month contributes only itself.
A worked example
Suppose you want 1,000,000 in five years, starting from nothing, and you assume a 6% return.
The required contribution is 14,391 a month. Over 60 months that is 863,460 of your own money, with the remaining 136,540 coming from growth.
If you already hold something, the first term does the work: the starting balance compounds for the full five years on its own, and the monthly amount only has to cover the gap that is left.
Choosing the return honestly
The return you assume is the one input that can quietly make the plan wrong. A high assumption lowers the required contribution and makes the goal look easy, which is pleasant and useless.
For a goal within about three years, assume very little growth. The money needs to be somewhere safe, and safe places pay close to the savings rate. For a goal ten years out, a higher assumption is defensible because there is time to ride out a bad stretch. The further away the goal, the more risk the timeline can absorb — not because returns are more certain, but because there is room to recover.
Questions people ask
What return should I assume?
Use something you would be comfortable defending if it turned out to be wrong. For money you will need within three years, the honest answer is close to the prevailing savings rate. For longer horizons people commonly use a figure in the mid single digits after inflation, but that is a long-run average and not a promise about your particular five years.
Does this account for inflation?
Not directly. The target is in today’s money, so if the goal is a real purchase ten years out, the thing itself will cost more by then. The inflation calculator will tell you what the target should be to keep the same buying power, and that figure is the one to bring back here.
What if I cannot afford the monthly amount?
Three levers, and only three: push the deadline out, lower the target, or accept more risk in the hope of a higher return. The first two are under your control and the third is not, which is usually the order worth trying them in.
Why does the required amount fall so much when I add a year?
Because you gain twelve more contributions and every existing one gets twelve more months to grow. Both terms of the equation improve at once, which is why deadlines are the most powerful input on the page.
Method and figures last reviewed . Every worked example here is produced by the same calculation the page runs — enter the same inputs above and the numbers will match.