How to Use the Savings Goal Calculator

Enter the amount you want to save and how much you already have. Then enter the time available and an expected annual interest rate.

Choose whether you want to contribute weekly, fortnightly or monthly. The calculator will estimate the contribution required to reach the target by the end of the selected period.

The calculator estimates:

• Required regular savings contribution;
• Future value of current savings;
• Total regular contributions;
• Total personal contributions;
• Estimated interest earned;
• Progress toward the savings target; and
• A year-by-year savings schedule.

How Is the Required Savings Amount Calculated?

The calculator first estimates how much your existing savings may grow over the selected period.

It then calculates how much additional future value is required to reach the target and determines the regular payment needed to fill that gap.

Savings Goal Example

Why Does Interest Reduce the Amount I Need to Save?

If your savings account or investment earns a positive return, part of the final balance can come from investment or interest earnings rather than only from your own contributions.

This means a higher assumed return can reduce the regular contribution required to reach the same target.

However, higher returns are not guaranteed, so it is useful to use realistic assumptions.

Weekly vs Fortnightly vs Monthly Savings

The contribution frequency affects how often money is added to your savings balance.

The calculator supports:

• 52 weekly contributions per year;
• 26 fortnightly contributions per year; and
• 12 monthly contributions per year.

The same annual savings amount can therefore be divided differently depending on how often you prefer to contribute.

Beginning vs End of Period Contributions

If you contribute at the beginning of each period, each contribution has slightly more time to earn interest.

As a result, the required contribution can be slightly lower than if the same contribution is made at the end of each period.

What If I Already Have Enough Saved?

If the future value of your existing savings is already sufficient to reach the target, the calculator will display a required regular contribution of $0.

This can happen if:

• Your current savings are already close to the target;
• You have a long time horizon; or
• Your assumed return is high enough for existing savings to grow to the target.

How Does Inflation Affect a Savings Goal?

Inflation can reduce the future purchasing power of money.

For example, a goal of $50,000 today may require a larger dollar amount in five or ten years to buy the same goods or services.

The optional inflation adjustment increases the target using:

This can be useful for longer-term goals such as education, a future car purchase or a home deposit.

Common Savings Goals

A savings goal calculator can be useful for planning:

• A home deposit;
• An emergency fund;
• A car purchase;
• A holiday;
• Education expenses;
• Wedding expenses;
• Home renovations;
• Business startup costs; or
• Other major future purchases.

How Much Should I Save Each Month?

The amount depends on four main factors:

• Your target amount;
• Your existing savings;
• The time available; and
• The return earned on your savings.

A larger starting balance or longer savings period generally reduces the amount required each month.

Saving Without Interest

If you enter an interest rate of 0%, the calculation becomes much simpler.

This can be useful when modelling money held in a non-interest-bearing account or when you want a conservative estimate.

Savings Account vs Investment Account

A savings account may provide a relatively stable interest rate, whereas investments such as shares or managed funds can have more variable returns.

A higher potential return can reduce the amount you need to contribute, but it also generally involves greater uncertainty or risk.

The rate entered in this calculator is only a mathematical assumption.

Does This Calculator Include Tax?

No. Interest and investment earnings can have tax consequences depending on the account, investment and your personal circumstances.

This calculator does not automatically include:

• Income tax on interest;
• Capital gains tax;
• Investment fees;
• Account fees;
• Brokerage;
• Inflation unless selected; or
• Changes in interest rates over time.

Savings Goal Calculator Assumptions

This calculator assumes:

• The target is reached at the end of the selected term;
• The annual interest rate remains constant;
• Regular contributions remain the same;
• Contributions occur at the selected frequency;
• Interest is converted to the selected contribution frequency;
• No withdrawals are made;
• No tax or account fees are deducted;
• Inflation is ignored unless the option is selected; and
• Results are estimates rather than guaranteed future outcomes.

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