Savings Goal Calculator

The savings goal calculation solves for whichever variable you leave blank. To find the monthly saving needed, it rearranges the future value of an annuity formula into PMT = FV x (r/12) / [((1 + r/12)^(12n) - 1)], where FV is the target amount, r is the annual interest rate, and n is the number of years. Because each deposit starts earning interest the month it lands, the required saving comes out lower than simple division of the target by the number of months. Putting £20,000 away over 5 years at 4.5% AER needs £298 a month, and lifting that to £400 a month over the same period produces £26,800.

Turn the same relationship round and it tells you how long a fixed monthly amount takes to reach a target, using n = ln(1 + FV x r / (12 x PMT)) / (12 x ln(1 + r/12)). At 0% interest, saving £500 a month to reach £30,000 takes exactly 60 months. At 4% AER compound interest brings that down to roughly 56 months, so the account has effectively paid two months of contributions on your behalf.

Starting balances are treated separately from the monthly flow, because a lump sum compounds for the whole period while each contribution only compounds from the month it arrives. If you already have £5,000 saved toward a £25,000 goal, the two streams grow in parallel, and £5,000 plus £200 a month at 4.5% comes to £19,750 after 5 years. The inflation setting then asks the harder question of whether the target will still buy what you expect. A £30,000 target in 5 years needs to be £34,400 at 2.8% inflation to hold the same value.

Rates in 2026 sit in a fairly narrow band. Easy access accounts pay 4.0-5.0%, with Chase, Marcus and Atom among the familiar names. Notice accounts of 35-90 days pay 4.5-5.2%. Fixed-rate bonds run 4.5-5.5% over one year, 4.3-5.2% over two and 4.0-5.0% over five, and cash ISA rates currently match their taxable equivalents. Regular saver accounts advertise the highest headline rates at 6-8%, but they cap deposits at £200-£300 a month and are usually limited to existing customers. Premium Bonds pay an average prize rate of 4.35% from the September 2026 draw, tax-free but never guaranteed. Moneyfacts, MoneySavingExpert and Which? track the tables, which move weekly.

Tax rarely bites on modest balances, thanks to a Personal Savings Allowance of £1,000 for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate. It arrives sooner than expected all the same, since £20k at 4.5% throws off £900 of interest and swallows most of a higher-rate allowance. The £20,000 ISA allowance shelters interest whatever your band and resets every 6 April on a use-it-or-lose-it basis. Cash ISAs suit goals 1-3 years out and stocks and shares ISAs those 7 or more years away, where 5-7% real returns have been the long-run pattern. Under-40s can add £4,000 a year to a Lifetime ISA for a 25% bonus worth up to £1,000, and Junior ISAs take £9,000 a year until a child turns 18.

Typical targets give those formulas something concrete to chew on. An emergency fund of 3-6 months of expenses usually means £8,000-£15,000. A first-time buyer deposit runs £20,000-£60,000, around 5-15% of a £200k-£600k property. Weddings absorb £5,000-£25,000, cars £3,000-£15,000 and holidays £500-£3,000. Retirement is the largest goal of all, since the State Pension of £241 a week comes to about £12.5k a year while most people want £20-£30k. Saving £200 a month from 25 to 65 at 6% builds roughly £400k, enough for about £16k a year in drawdown, while the same £200 started at 35 builds £200k and about £8k a year.

Compounding rewards the early years far more than the late ones. £100 a month at 5% for 30 years reaches £83,226, of which £36,000 is your own money and £47,226 is interest. Run the same habit for 40 years and it reaches £148,856, with £48,000 contributed and £100,856 earned, so one extra decade more than doubles the interest. The Rule of 72 gives the shorthand, dividing 72 by the rate to get a doubling time of 14.4 years at 5%, 10.3 years at 7% and 7.2 years at 10%. Inflation runs the same arithmetic in reverse, halving the value of money in about 24 years at 3%.