Your balance year by year
| Time | Balance | Interest so far |
|---|---|---|
| Year 1 | $3,883.23 | $90.83 |
| Year 2 | $6,881.79 | $296.99 |
| Year 3 | $10,000.30 | $623.10 |
How to calculate a savings goal
Work out what your starting amount grows to, take that off the goal, then divide what is left by what $1 saved every month grows to. Excel's PMT function does the same sum: Microsoft's example saves $129.08 a month to have $50,000 in 18 years at 6%.
Here it is with your numbers:
- Growth each month at 4.00% APY: (1 + 0.04) ^ (1 ÷ 12) = 1.00327374.
- Over 36 months: 1.00327374 ^ 36 = 1.124864.
- Your starting amount grows: $1,000.00 × 1.124864 = $1,124.86.
- Still needed from your savings: $10,000.00 − $1,124.86 = $8,875.14.
- Each $1 a month grows to: (1.124864 − 1) ÷ (1.00327374 − 1) = 38.1411.
- Amount each month: $8,875.14 ÷ 38.1411 = 232.6924.
- Round up to the cent so you don't fall short: $232.70 a month.
It means $232.70 every month for 3 years gets you to $10,000.00, with $10,000.30.
Source Microsoft Support · PMT function ↗Microsoft Support · NPER function ↗
We round the monthly amount up to the cent, so saving it really gets you there. Microsoft's $129.08 is 129.0812 rounded to the nearest cent, which leaves you with $49,999.55 after 18 years, 45 cents short; we show $129.09.
APY or interest rate?
Banks show savings rates as an annual percentage yield (APY): the interest $100 earns in a year, including interest on interest. This calculator reads your rate as an APY. If your bank gives an interest rate and says how often it compounds, change "The rate is" under More options.
Source CFPB · Regulation DD, Appendix A (annual percentage yield) ↗
Set a goal you can keep
The CFPB says a specific goal helps you stay motivated, and that automatic transfers from checking to savings are one of the easiest ways to save regularly.
Source CFPB · An essential guide to building an emergency fund ↗
FAQs
How much do I have to save a month to save $10,000 in a year?
With no interest, $833.34 a month (10,000 ÷ 12, rounded up to the cent). At 4.00% APY it is $818.44 a month, because the interest does some of the work.
Is it possible to save $10,000 in 6 months?
It takes $1,666.67 a month with no interest, or $1,653.08 a month at 4.00% APY. Over 6 months interest makes little difference, so the amount you can put away matters most.
How long will it take to reach my savings goal?
Choose "How long it takes" above and enter what you can save each month. The answer is the first month your balance reaches the goal, which is how Excel's NPER function counts it, rounded up to a whole month.
Sources
- Microsoft Support: PMT function
- Microsoft Support: NPER function
- CFPB: Regulation DD, Appendix A (annual percentage yield)
- CFPB: An essential guide to building an emergency fund