How it is calculated
We subtract what your current savings will grow to, then divide the rest by the monthly saving factor:
PMT = (Goal − PV(1+r)^n) × r ÷ ((1+r)^n − 1)where r is the monthly return and n the months. With zero return it becomes a simple division.
Worked example
A 120,000 goal in 4 years with 20,000 saved at 4% a year: you need about 1,862 a month. With no return, 2,083 a month.
Frequently asked questions
Where should I keep the money?
For goals under about 3 years prefer safe, liquid accounts; for longer goals consider suitable investment funds.
What about inflation?
Raise the goal by expected inflation — the price of a home or car will likely rise.
Should I automate it?
An automatic transfer on payday is the most reliable way to stick to the plan.