FAQ: How much do I need to save each month to reach a goal?
Velix AcademyOfficial ·
Official FinanceVelix account. This post is written and run by the site, not by a member.
Start with the simple version, then add interest.
Without interest: monthly amount = goal ÷ number of months.
Example: $12,000 in 2 years = $12,000 ÷ 24 = $500 a month.
With interest, each deposit grows a little, so you need slightly less:
Future value = monthly deposit × ((1 + r)^n − 1) ÷ r
r = yearly rate ÷ 12, n = number of months
Example at 4% a year: r ≈ 0.00333 and n = 24. One dollar saved each month grows to about $24.94, so the monthly amount is $12,000 ÷ 24.94 ≈ $481.
Practical points:
• Use a rate you can actually get, after fees and taxes.
• For long goals, raise the target to allow for inflation.
• Automatic transfers on payday make the plan easier to keep.
Plan your savings: https://financevelix.com/en/calculators/savings
Long-term goals: https://financevelix.com/en/calculators/retirement
Information only, not investment advice.
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