Dream Savings Calculator (monthly saving for a goal by a date)

Understanding the savings goal calculator — concept and principle

This calculator works out how much to save each month (and each week) to afford a goal, such as a trip, a car or a wedding, by a chosen date. It first raises the cost for expected price rises, grows the savings you already have, and then finds the monthly deposit that fills the gap. It also shows the total you pay in and the interest earned. Use it to turn a dream into a monthly plan.

The goal grows with prices; existing savings, 36 deposits and $1,008 of interest together reach $21,538.

How it is calculated

Goal in future money = cost × (1 + price rise)^years.
Monthly return r = (1 + annual return)^(1/12) − 1.
Current savings grow to savings × (1 + annual return)^years.
Gap = goal − grown savings.
Monthly saving = gap × r ÷ ((1 + r)^n − 1), with n months and deposits at the end of each month (gap ÷ n if the return is 0).
Weekly saving = monthly × 12 ÷ 52.

The principle

Two forces work in opposite directions: prices rise, making the goal more expensive, and savings earn a return, making each deposit worth more by the target date. The sinking-fund formula finds the level deposit whose future value, including interest, exactly matches the gap. Starting earlier means more months and more compounding, so the monthly amount falls quickly.

Worked example

Default inputs: cost $20,000 today, 3 years, savings $2,000, return 3% a year, price rise 2.5%.

Goal = 20,000 × 1.025³ ≈ $21,538.
Current savings grow to 2,000 × 1.03³ ≈ $2,185.
Gap ≈ 21,538 − 2,185 = $19,352.
r = 1.03^(1/12) − 1 ≈ 0.247%; n = 36; monthly saving ≈ $514.72.
Total paid in ≈ $18,530; interest earned ≈ $1,008; weekly ≈ $118.78.

Each point is the calculator re-run with only “Years until you want it” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Years until you want it	Monthly saving needed
0.75	$2,016.55
1.5	$1,015.32
2.25	$681.58
3	$514.72
3.75	$414.60
4.5	$347.85
6	$264.43

How to read the result

The monthly figure is your plan. If it is too high, extend the deadline, lower the cost or start with a larger lump sum. Automating the transfer on payday makes the plan easier to keep.

Common mistakes

Ignoring price rises, which makes the target too low.
Expecting a high return from savings that must be safe and available.
Forgetting taxes on interest.
Mixing up today's cost and the future cost.

Keep in mind: Returns and price rises are assumptions; real results vary. This is a planning aid, not financial advice.

Frequently asked questions

How much do I need to save each month?

Enter the cost, time, current savings, expected return and price rise; the calculator gives the level monthly deposit.

Why include a price rise?

The same goal usually costs more in the future, so the target must grow.

What if I already have enough?

If your savings already cover the goal, the required monthly saving is 0.

Sources: R. A. DeFusco et al., Quantitative Investment Analysis (CFA Institute / Wiley), The Time Value of Money (future value of a lump sum and of an ordinary annuity)

Checked 9 Nov 2026. Future value of a lump sum and of an ordinary annuity, solved for the payment (sinking fund): R. A. DeFusco et al., “Quantitative Investment Analysis”, CFA Institute / Wiley, reading “The Time Value of Money”.

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