How the required deposit is calculated
To reach a savings goal by a set date, you can work backward to the monthly deposit you need. With interest compounding monthly, the formula is monthly deposit = goal × i ÷ ((1 + i)n − 1), where i is the monthly rate (annual rate ÷ 12) and n is the total number of months. When the rate is 0%, it simplifies to goal ÷ number of months. The interest your deposits earn means you contribute less than the goal itself. Going the other way — fixed deposit, unknown total — is the savings calculator.
How to use this calculator
Enter your savings goal, the annual interest rate you expect to earn, and the number of years until you need the money. The tool returns the monthly deposit required, the total you will deposit, and how much of the goal comes from interest. A longer timeline or higher rate lowers the monthly amount. This is the reverse of growing a known deposit — compare with the Rule of 72 calculator for a quick doubling estimate. A very common target is a house deposit, sized by the down payment calculator.
Worked example
To reach $10,000 in 5 years at a 5% annual rate: the monthly rate is about 0.004167 over 60 months, so you need about $147.05 a month. You deposit roughly $8,823 of your own money; interest covers the rest. A longer horizon cuts the monthly amount sharply:
| Years | Monthly deposit (5%) |
|---|---|
| 3 | $258.27 |
| 5 | $147.05 |
| 10 | $64.40 |
These figures are an estimate for general information only and are not financial advice; consult a qualified professional before making money decisions. Interest does some of the work for you, as the compound interest calculator shows.
Frequently asked questions
- How much should I save each month to reach $10,000?
- To reach $10,000 in 5 years at a 5% annual rate, you need about $147.05 a month, with interest covering the rest of the goal.
- How is the monthly deposit calculated?
- It uses goal × i ÷ ((1 + i)^n − 1), where i is the monthly rate and n is the number of months. With no interest, it is simply the goal divided by the months.
- What if the interest rate is 0%?
- With no interest, divide your goal by the number of months. For $10,000 over 5 years that is $10,000 ÷ 60 ≈ $166.67 a month.
- Why do I deposit less than my goal?
- Because your deposits earn interest along the way. The longer the timeline and higher the rate, the more of the goal is funded by interest rather than your own contributions.
- What if I have already saved part of the goal?
- Subtract your current balance from the goal before entering it. That is slightly conservative, because the money you already hold keeps earning interest too, so you will likely reach the target a little early or with smaller deposits.