What Is a Savings Calculator?
A savings calculator shows you two things: how long it will take to reach a financial goal given your current savings rate, or how much you need to save each month to hit a specific goal by a target date. Both calculations factor in compound interest — the powerful force that makes your savings grow faster over time.
How Compound Interest Accelerates Savings
FV = PV × (1 + r/n)^(n×t) + PMT × [(1 + r/n)^(n×t) - 1] / (r/n)
PV = present value · PMT = monthly payment · r = annual rate · n = compounding periods · t = years
Where to Keep Your Savings
- Emergency fund (0–6 months horizon): High-yield savings account (HYSA) — currently 4.5–5.5% APY in 2026, FDIC insured, fully liquid
- Short-term goals (1–3 years): HYSA, money market account, or short-term CDs — prioritize capital preservation over returns
- Medium-term goals (3–7 years): Conservative investment mix — bond funds or a 60/40 portfolio
- Long-term goals (7+ years): Invest in low-cost index funds — S&P 500 index funds have averaged ~10% annually over the past 50 years
Benefits of Using a Savings Calculator
- Shows the exact monthly contribution needed: Enter your goal and deadline — the calculator works backward to tell you the precise monthly amount required.
- Visualizes compound growth: The growth chart shows how early contributions snowball over time, making the case for starting today rather than waiting.
- Compare interest rate scenarios: Quickly see the difference between a 4.5% HYSA and a 5.2% CD — useful for choosing where to park your savings.
- Anchors realistic goal-setting: If the required monthly amount exceeds your budget, adjust the goal amount or timeline until the number is achievable.
Frequently Asked Questions
How much should I save each month?
The 50/30/20 rule suggests 20% of take-home income. At minimum, capture your full 401(k) employer match, build a 3–6 month emergency fund, and contribute to a Roth IRA ($7,500 in 2026). This calculator shows the exact amount needed based on your specific goal and timeline.
What interest rate should I use?
For a high-yield savings account, use the current rate (4.5–5.5% in 2026). For a balanced 60/40 investment portfolio, use 7–8% historically. For an all-stock S&P 500 fund, 10% before inflation, 7% after. Use conservative estimates (5–7%) for planning to avoid overestimating growth.
What is compound interest?
Compound interest means earning interest on your previous interest, not just your principal. $10,000 at 7% for 30 years becomes $76,123 — over 7x — because each year's interest gets added to the principal for the next year's calculation. Starting early is the most powerful lever; no amount of saving later can fully compensate for lost compounding time.
How much should I have in an emergency fund?
3–6 months of essential expenses (rent, utilities, groceries, transportation, minimum loan payments). Stable employees: 3 months. Self-employed or variable income: 6 months. Keep it in an HYSA, not investments — you need it accessible and not subject to market volatility.
What is HYSA vs money market vs CD?
HYSA: liquid, ~5% APY in 2026, FDIC insured — best for emergency funds and short-term savings. Money Market: similar to HYSA with check-writing features. CD: locks funds for a fixed term at a guaranteed rate — good if rates are high and you won't need the money before maturity. All three are FDIC insured up to $250,000.
What's the difference between saving and investing?
Saving = low-risk, liquid accounts (HYSA, CDs). Investing = higher-risk assets with higher return potential (stocks, bonds, index funds). Rule of thumb: money needed within 3 years goes in savings; money needed in 5+ years should be invested to outpace inflation. Don't invest your emergency fund.
How does starting early affect savings?
Dramatically. Saving $500/month from age 25 at 7% yields ~$1.3M at 65. Starting at 35 yields ~$610K — less than half. The extra 10 years of compounding is worth more than additional contributions. Time is your most valuable asset in savings and investing.
What is the 2026 Roth IRA contribution limit?
$7,500 for under 50; $8,600 for age 50+ in 2026. Phase-out begins at $153K income (single) and $242K (married). Contributions can't exceed earned income. You can contribute to both a 401(k) and Roth IRA in the same year. Deadline is the tax filing date (typically April 15 of the following year).