Savings Goal Calculator

Most saving advice starts with a percentage of income. That works for retirement, where the deadline is decades away, and fails for everything else — a house deposit, a wedding, a car, a sabbatical — because those have a date attached.

Working backwards fixes it. Fix the target and the deadline, and the required monthly contribution falls out of the arithmetic. If that number is impossible, you have learned something useful immediately: either the target moves, the date moves, or the plan does not survive contact with your budget.

The return assumption matters far less than choosing the right container. Money needed inside three years belongs in a high-yield savings account, money market fund, Treasury bill or CD — capital-stable instruments where the point is that the balance is there when you need it.

Money with a five-year-plus horizon can reasonably sit in a diversified index fund, where the expected return is higher and a bad year has time to recover. Money in between is a judgement call. The mistake to avoid is investing a two-year house deposit in equities: a 25% drawdown three months before completion is not a temporary setback, it is a cancelled purchase.

Savings that depend on what is left at the end of the month reliably lose to spending. A standing transfer on payday, into an account without a debit card attached, converts saving from a monthly decision into a default.

Split direct deposit at the payroll level if your employer supports it — the money never lands in the current account at all. The behavioural literature is unusually consistent here: automation moves savings rates more than any amount of budgeting discipline.

A goal set in today's dollars quietly gets harder every year. A $60,000 house deposit in five years needs about $68,000 at 2.5% inflation to buy the same house — and housing has historically outrun general inflation.

Two defences: set the target in future dollars from the outset by inflating it forward, or escalate the contribution annually in line with pay rises. Increasing the monthly amount by 3% a year is nearly painless and closes most of the gap.

Before any goal with a date on it, three to six months of essential expenses in an accessible account. It is unglamorous, it earns less than the alternatives, and it is the single thing that stops an unexpected bill from becoming credit card debt at 22%.

Once that exists, run goals in parallel rather than in series, with separate named accounts. Progress you can see on three fronts sustains the habit far better than a single pot that never seems to move.