Saving for a goal
Work backwards from your target and date to the monthly amount, allowing for a head start and the interest you earn.
Saving for something specific works best backwards. You fix the target, say £20,000, and the date, say in five years, then work out the monthly amount that gets you there. Two things shrink that monthly figure: any money you already have put by, and the interest you earn along the way. So you usually need to save a little less than the target divided by the number of months.
The short version
- Start from the answer you want: the target amount and the date you want it by.
- A starting pot gives you a head start, and it earns interest the whole time, so it lowers the monthly amount more than its size alone suggests.
- The interest you earn does some of the work, so you save a bit less than the target split evenly across the months.
- More time means a lower monthly amount. £20,000 in five years from a £2,000 start at 4% is about £265 a month. Every figure here is an estimate, and returns are not guaranteed.
Below is the same £20,000 goal at 4%, started from £2,000, across different deadlines. It shows how much the timeline alone moves the monthly amount.
| Time to save | Monthly amount needed |
|---|---|
| 2 years | £715 |
| 3 years | £465 |
| 5 years | £265 |
| 8 years | £153 |
| 10 years | £116 |
Goal of £20,000, starting from £2,000, at an assumed 4% a year. Rounded to the nearest pound. Real rates vary, so treat these as estimates.
How to work it out
The goal-first approach flips the usual question. Instead of asking what a set monthly amount grows into, you fix the result and solve for the contribution. You need four numbers:
- The target. The total you want to reach, for example a £20,000 deposit or a £5,000 emergency fund.
- The deadline. How long you have, in months or years. This has the biggest single effect on the monthly amount.
- The starting pot. Any money you already have set aside for this goal. Zero is fine if you are starting from scratch.
- The interest rate. The annual rate you expect to earn on the account you will use. Pick something you could actually get.
From there the maths does two jobs. First it works out what your starting pot grows to on its own by the deadline. Then it spreads the remaining gap across the months, allowing for the interest each contribution earns between paying it in and reaching the target. That is why the answer comes out lower than simply dividing the target by the number of months. If your starting pot would already reach the target on its own, the monthly amount needed is zero.
This is the work-backwards-from-a-target framing. If you would rather fix the monthly amount and see what it grows into, that is the forward view we cover in how savings grow over time. And if you want the underlying mechanics of money earning interest on interest, see how compound interest works.
A worked example
Say you want £20,000 in five years for a house deposit. You already have £2,000 set aside, and you expect to earn 4% a year on it.
Five years is 60 months. A naive split would be £20,000 minus £2,000, divided by 60, which is £300 a month. But that ignores two things working in your favour. Your £2,000 grows to roughly £2,442 over the five years at 4%, and every monthly contribution earns interest from the moment it lands. Once you account for both, the monthly amount needed comes out at about £265, a little under the naive figure. Over the five years you pay in around £17,890 of your own money, and interest covers the rest.
The longer the deadline, the wider that gap between the naive split and the real figure, because the interest has more time to compound.
How a head start helps
A starting pot pulls the monthly amount down more than its size alone would suggest, because it earns interest for the whole period rather than just the months left after you pay it in. Here is the same £20,000 goal over five years at 4%, with different starting pots.
| Starting pot | Monthly amount needed |
|---|---|
| £0 | £302 |
| £2,000 | £265 |
| £5,000 | £210 |
| £10,000 | £118 |
Goal of £20,000 in five years at an assumed 4% a year, rounded to the nearest pound. A £10,000 head start more than halves the monthly amount, because that lump sum is also growing in the background the entire time.
How time helps
Of the four numbers, the deadline moves the monthly amount the most. Look again at the first table: doubling the time from five years to ten cuts the monthly amount from about £265 to about £116, well under half. That is partly because you are spreading the target across twice as many months, and partly because the extra years give interest longer to compound, so more of the goal is met by growth rather than your own contributions.
The trade-off is obvious: a longer deadline means waiting longer for the money. If the goal has a fixed date, like a wedding or a fixed-term let ending, the deadline is set and the monthly amount is what it is. If the date is flexible, stretching it is the easiest way to make the plan fit your budget.
Staying realistic
The figure you get is an estimate, built on the assumption that your interest rate holds steady. In practice savings rates move, so check the current rate on the account you plan to use rather than guessing, and revisit your plan if it changes. Returns are never guaranteed.
It also helps to keep this money separate, in its own account, so you can see the progress and are less tempted to dip in. If the monthly amount comes out higher than you can manage, pull one of the three levers: give yourself longer, trim the target, or add to the starting pot if you can. A smaller amount started now still gets you moving.
To put your own target, deadline, starting pot and rate in and see the exact monthly amount, use the savings goal calculator. If your goal is longer-term and about building wealth or stopping work early, you might also find what FIRE means a useful read.
Common questions
- How much should I save each month to hit a target?
- Take the amount you want and the date you want it by, then divide and adjust for two things: any money you already have set aside, and the interest you expect to earn. As a rough guide, £20,000 in five years from a £2,000 start at 4% works out at about £265 a month. Change the target, the date, the starting pot or the rate and that number moves.
- Does my starting pot really change the monthly amount that much?
- Yes, and more than people expect, because the head start earns interest for the whole period too. For a £20,000 goal in five years at 4%, starting from nothing needs about £302 a month; starting from £5,000 brings it down to roughly £210. The bigger the head start, the smaller the monthly amount.
- What interest rate should I assume?
- Use a rate you could actually get on the account you plan to use, and lean towards the cautious side. Easy-access and fixed-rate savings rates change over time, so check current rates before you commit to a figure. For money you might need at short notice, an easy-access account matters more than squeezing out the last fraction of a percent.
- What if the monthly amount is more than I can afford?
- You have three levers. Give yourself longer, lower the target, or start with a bigger lump sum if you can. Stretching the deadline has the biggest effect on the monthly figure. If none of those work, save what you can now and revisit the plan as your income changes; a smaller amount started today still beats waiting.
- Should I keep this money in cash savings or invest it?
- It depends on the timeline. Money you need within about five years is usually kept in cash savings, where the balance does not fall. For goals further out, some people use investments for the chance of higher growth, accepting that the value can go down as well as up. This is general information, not advice; consider speaking to a regulated adviser for anything long-term.
- Is the monthly figure exact?
- No. It is an estimate built on the rate you assume staying steady, which real-world rates rarely do. Returns are not guaranteed. Treat the figure as a sensible target to aim at, check your progress every so often, and adjust the amount if rates or your plans change.
About this article
Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. The worked figures here come from our own savings goal calculator, which inverts the standard future-value formula to find the monthly amount, and we checked the general approach against MoneyHelper. The figures are estimates to help you plan, not financial advice. They assume a steady interest rate, and real returns vary and are not guaranteed. Last updated June 2026.