How it works
How the savings goal calculator works
This calculator solves for time: given a savings target, an initial lump sum, a monthly contribution and an annual interest rate, it tells you exactly how many months until you hit your goal. It applies compound interest, credited monthly, to both the lump sum and every regular contribution you make along the way.
You can flip the question too — enter your deadline and target to see what monthly amount you need to save. Both approaches use the standard future value of an annuity formula. For a complementary view of how interest compounds over longer horizons, see the compound interest calculator.
The compound interest formula explained
With monthly compounding at an annual rate r, the monthly rate is r/12. After n months, a starting balance PV and a regular monthly contribution PMT grow to:
FV = PV × (1 + r/12)^n + PMT × [(1 + r/12)^n − 1] / (r/12)
To solve for n (number of months to reach a target FV), rearrange using logarithms. The calculator handles this automatically. A small but important nuance: contributions made at the start of each month (annuity-due) earn one extra period of interest compared with contributions made at the end (annuity-immediate). Most savings accounts credit interest on the balance at the end of each month, so the calculator uses end-of-month contributions.
| Monthly saving | Rate (AER) | Target | Time to reach |
|---|---|---|---|
| £200 | 4.5% | £10,000 | 3 yrs 11 mths |
| £300 | 4.5% | £16,000 | 4 yrs 2 mths |
| £500 | 5.0% | £30,000 | 4 yrs 7 mths |
| £1,000 | 5.0% | £60,000 | 4 yrs 8 mths |
Choosing the right savings account
The interest rate you earn dramatically affects how long your goal takes. In mid-2026 the UK easy-access savings market offers roughly 4–4.75% AER from the top-paying accounts; fixed-rate bonds (1-year) sit around 4.75–5.25%. FSCS protection covers up to £85,000 per regulated institution, so spreading large sums across providers preserves full protection.
| Account type | Typical AER (2026) | Flexibility | Best for |
|---|---|---|---|
| Easy-access savings | 4.0–4.75% | Withdraw anytime | Emergency fund, short goals |
| Notice account (90 days) | 4.5–5.0% | Notice period required | Medium-term goals |
| Fixed-rate bond (1 year) | 4.75–5.25% | Locked in | Known-date goals |
| Cash ISA | 4.0–4.75% | Tax-free, flexible | Any goal, taxpayers |
| Stocks & Shares ISA | Variable (7–9% historic) | Market risk | Long-term goals (5+ yrs) |
ISA allowance and tax-free savings
Every UK adult has an annual ISA allowance of £20,000 (2026/27). Interest earned inside an ISA is completely free of Income Tax — unlike a standard savings account, where interest above the Personal Savings Allowance (£1,000 for basic-rate, £500 for higher-rate, £0 for additional-rate taxpayers) is taxable.
The Lifetime ISA (LISA) is worth knowing for goals tied to a first home purchase or retirement. You can save up to £4,000/year into a LISA and the government adds a 25% bonus (£1,000 maximum per year). The property purchase must cost no more than £450,000; withdrawing for any other purpose before age 60 triggers a 25% penalty which, on current bonus rates, effectively means you lose more than the bonus.
ISA types available in 2026:
- Cash ISA — instant or notice access, FSCS-protected, up to £20,000.
- Stocks & Shares ISA — invested in funds or shares, higher long-term potential, market risk.
- Lifetime ISA (LISA) — for first home (up to £450,000) or retirement; 25% government bonus on up to £4,000/year.
- Innovative Finance ISA — peer-to-peer lending, NOT FSCS-protected.
- Junior ISA — for under-18s, £9,000 annual allowance.
Inflation and the real return on savings
Nominal interest rates look attractive, but inflation erodes purchasing power. The real return is approximately: nominal rate − inflation rate. With UK CPI at around 2.5% in 2026 and easy-access accounts paying 4.5%, real returns are roughly 2% — still positive, but lower than headline rates suggest.
For goals more than 5 years away, many financial planners recommend holding a portion in a Stocks & Shares ISA. UK equities have historically returned around 7–9% per year over rolling 10-year periods (nominal), which significantly outpaces savings rates over longer time horizons, despite short-term volatility.
Emergency fund first, then saving for goals
Financial planners universally recommend building a 3–6 month emergency fund before committing to goal-based saving. An emergency fund should be in a no-penalty easy-access account, separate from your goal savings pot so you are not tempted to dip into it.
Once your emergency buffer is in place, start with the highest-priority goal — typically a house deposit or paying off high-interest debt. The compound interest calculator can show you the long-run cost of carrying credit card debt at 20%+ APR versus earning 4.5% on savings. The maths almost always favours paying off debt first.