How much do I need to save each month?
The calculator first grows your current savings at the account’s APY until the target date. Whatever is still missing must come from monthly deposits, which are solved with the future-value-of-an-annuity formula:
Here i is the monthly rate equivalent to the APY and n is the number of months. Deposits are assumed at the end of each month.
Example
To turn $2,000 into $20,000 in 3 years in a 4.5% APY high-yield account you need to save about $461 a month. You deposit $18,604 in total and the account pays roughly $1,396 of interest.
Where to keep short-term savings
- High-yield savings accounts — FDIC-insured, withdraw any time, rates change with the market.
- Certificates of deposit (CDs) — a fixed rate for a fixed term; early withdrawal costs a penalty.
- Money market accounts and Treasury bills — competitive yields with high safety.
For goals more than about five years away, a diversified investment portfolio has historically grown faster than savings accounts, at the cost of short-term ups and downs. Use the investment calculator for those.
Tips to reach a savings goal faster
- Automate a transfer on payday so the money is saved before you can spend it.
- Name the account after the goal — people save more when the purpose is visible.
- Send windfalls such as tax refunds and bonuses straight to the goal.
Related Cash Growth & Compounding Tools
Regular automated deposits transform modest monthly savings into substantial wealth. Model exponential future value growth with our Compound Interest Calculator, establish a 3-to-6 month safety cushion using the Emergency Fund Calculator, compare fixed-term yields via the CD Calculator, and verify effective compounding with our APY Calculator.
Frequently asked questions
What's the difference between APY and interest rate?
The interest rate (APR) doesn't include compounding; APY does. A 4.40% rate compounded daily is about a 4.50% APY. Banks advertise APY for savings, and that's what this calculator expects.
Is interest on savings taxable?
Yes. Interest from savings accounts, CDs and money market accounts is taxed as ordinary income in the year it's paid. Your bank sends Form 1099-INT if you earn $10 or more.
How much should I keep in savings?
A common target is 3–6 months of essential expenses as an emergency fund, plus separate savings for known goals such as a car, home down payment or vacation.