What Is a Savings Goal? The Monthly Payment

A savings-goal calculation runs compound growth backward. You name the balance you want, what you have now, a rate, and a number of years. The result is the monthly amount that closes the gap.

Key takeaways

• The current balance grows first. The payment only has to cover what growth does not.
• Payments arrive at the end of each month. The monthly rate is the annual return divided by 12.
• $10,000 growing at 7% toward $100,000 in 10 years needs about $462 a month.
• If growth on the current balance already reaches the goal, the payment is $0.

The formula

Monthly contribution is the end-of-month payment that grows the current balance to the goal over the years, at the monthly rate.

At a 0% return the payment is simply the gap divided by the number of months. Growth does no work in that case.

A worked example

Goal $100,000. Current balance $10,000. Annual return 7%. Horizon 10 years.

The current $10,000 grows for 120 months. The calculator then solves for the payment that lands on $100,000. That payment is about $461.64 a month. Over 120 months you add about $55,397. The rest of the path from $10,000 to $100,000 is growth.

Run the same inputs in the savings goal calculator. If you already know the payment and want the ending balance instead, use the compound growth calculator.

What the payment tells you

It is the contribution that hits one target under one rate. A higher rate, or a larger balance today, lowers the payment. A shorter horizon raises it.

What the payment leaves out

Raises, taxes, fees, and a return that changes are not in the formula. The goal is a nominal balance unless you have already reduced it for inflation yourself. The page will not invent that reduction.

A live company such as Apple does not know your goal. The share price on that page is a snapshot, with an as-of date.

For general education only. Nothing here is investment advice.