How much to save each month, and what the interest covers

How much should you save each month to reach a goal?

Divide the goal by the number of months you have, then take off whatever the account adds along the way. A $30,000 goal three years out is 36 deposits of $833.33 if the money earns nothing at all. Move it somewhere paying 4% a year and the deposit drops to $785.72, because the account supplies $1,714 of the $30,000 itself.

That $1,714 is the number worth staring at, because it's the one that decides whether stretching your deadline is worth doing. It is also much smaller than most people expect — under six cents of every dollar in the goal.

One note on what "4%" means below: it's an annual rate compounded monthly, which is the standard way to run this kind of projection. If your bank quotes 4.00% APY instead — the yearly figure after compounding — the deposit works out under a dollar a month different on a goal this size. The two ways of quoting a rate are covered in APR vs APY.

How much of the goal does the interest cover?

Very little on a short deadline, and a surprising amount on a long one. The share isn't really a feature of the account — it's a feature of how long the money is left alone.

Here is the same $30,000, the same 4%, starting from nothing, with only the deadline changing:

Deposits are shown to the cent, totals to the nearest dollar.

Two things happen at once when you stretch the deadline. Every dollar you put in gets more years to earn — a deposit made at the end of the first month of the twelve-year plan works for 143 months, against 35 in the three-year plan. At the same time you're depositing less each month, which pulls the other way.

The first effect wins, so the interest's slice roughly doubles each time the deadline doubles: 5.7%, then 11.4%, then 21.9%. What it doesn't do on any deadline a savings goal normally has is take over. Even twelve years in, more than three-quarters of the goal is money you handed over yourself. Leave the same 4% running and the interest doesn't pass half until year thirty-two — that's a retirement timeline, not a savings goal.

Why does doubling the timeline more than halve the deposit?

Because the division halves it and the interest takes a little more off on top. With no return at all, twice as long is simply half the deposit: $833.33 a month becomes $416.67. Add a 4% return and the same doubling goes from $785.72 to $369.36 — $23.50 below half.

It repeats at the next doubling. Six years to twelve takes $369.36 to $162.66, when half would have been $184.68. The gap is small in dollars and worth knowing anyway: whenever someone tells you a deadline is out of reach, doubling it does slightly better than halving what it costs you.

Drag the years slider below and watch the teal slice — the part of the goal you don't have to deposit — grow:

Does chasing a higher interest rate help?

On a short goal, barely. On a long one, it's most of the plan. The same $30,000, at four different returns, on a three-year deadline and a twenty-year one:

Compare the top and bottom of each deposit column. Going from a checking account that pays nothing to a 7% return trims the three-year deposit by 9.8%, from $833.33 to $751.31 — about $82 a month. The identical jump on the twenty-year goal trims it by 53.9%, from $125.00 to $57.59.

Those two cuts, 9.8% and 53.9%, are the same numbers as the 7% row's share columns, and that isn't a coincidence. When you start from nothing, your deposits add up to the goal minus whatever the interest supplied — so the percentage a return knocks off your monthly is the same percentage of the goal it covers.

The gap between the two deadlines is what decides where your effort belongs. On a three-year goal, the realistic move — shifting money from an account paying 4% to one paying 5% — is worth about $12 a month. Raising the deposit by $50 beats that four times over, and the deposit is the part you control. On a fifteen-to-twenty-year goal, the return is carrying anywhere from a quarter to a little over half the load, which is why money with that kind of horizon ends up invested rather than parked — and why it has to be money you won't need on a fixed date, since a market that's down in the month you need it doesn't care about your deadline.

What does waiting actually cost?

The first table quietly assumes the thing you're saving for still costs $30,000 when you get there. It won't. At 3% a year, a $30,000 purchase costs $32,781.81 in three years and $42,772.83 in twelve — so the twelve-year plan is chasing a target that drifted up by $12,773, nearly twice the $6,577 the interest earned in the table above.

Here's the same comparison with the goal allowed to move:

Waiting still wins: $858.58 a month against $231.91 is a 73% cut, and ordinary price drift doesn't undo that — inflation would have to run past about 19% a year before the twelve-year plan cost more per month than the three-year one. But the headline is smaller than the first table made it look, because a 4% return against 3% inflation is barely a 1% return in the terms that decide whether you can afford the thing — what the money buys.

Notice what didn't move. The interest still covers 5.7%, 11.4%, and 21.9%, exactly as before. When you start from zero, that share depends on the rate and the number of years alone, so making the goal bigger makes the deposit bigger and leaves the split untouched. You can check it on any target you like in the savings goal calculator.

Does money you've already saved change the deposit much?

More than the amount itself, because a head start earns from day one instead of trickling in. Take the six-year version of the $30,000 goal and put $5,000 in on the first day: the deposit drops from $369.36 to $291.13 a month.

The $5,000 grows to $6,353.71 over the six years. Because your monthly deposits earn as they go too, that head start stands in for about $5,632 of them — roughly $632 more than the $5,000 itself. Counting the head start, you part with about $25,961 instead of $26,594 for the same $30,000.

This is the same engine behind Coast FIRE, where a balance is large enough and the deadline far enough away that the deposits can stop entirely. A savings goal a few years out sits at the opposite end of that scale — the money hasn't been given enough time to do much of the lifting, so the lifting is yours.

Frequently asked questions

Last reviewed July 2026. Rates and prices here are examples chosen to make the arithmetic clear, not forecasts or offers.