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Assumes saving at the start of each month with monthly compounding and a constant rate. Interest above your Personal Savings Allowance is taxable outside an ISA. Estimates only, not financial advice.
What The Savings Goal Calculator Works Out
- Time to reach goal: the number of months of saving, with interest compounding monthly, until the pot reaches your target. GBP 250 a month at 4% reaches GBP 10,000 in about 3 years 2 months, a couple of months sooner than with no interest.
- Monthly saving needed: the reverse sum: the fixed monthly deposit that lands exactly on the target by your deadline, found by simulating the pot month by month.
- Total you pay in: all your deposits added together, including anything already saved.
- Interest earned: the final balance minus what you paid in. Easy-access rates have recently sat around 3% to 4.5%, regular savers 5% to 7% on capped deposits, and fixed-rate bonds a little above easy access.
- Already saved (advanced): a starting balance that earns interest from day one, so the goal arrives sooner or needs a smaller monthly amount.
- Increase saving each year (advanced): steps the monthly deposit up on each anniversary, for example in line with pay rises. 3% to 5% a year is a realistic match for typical pay growth.
- Tax on interest (advanced): reduces the rate by your marginal tax band. Basic-rate taxpayers earn GBP 1,000 of interest tax free and higher-rate GBP 500 under the Personal Savings Allowance; a cash ISA shelters all of it, so choose "None" if you are inside the allowance or saving in an ISA.
- Inflation (advanced): shows what the target will be worth in today's money when you reach it. The Bank of England aims for 2%; UK inflation has averaged roughly 2% to 3% over the long run, so a GBP 10,000 goal five years out buys about GBP 8,800 of today's goods at 2.5%.
- Share of goal from interest (advanced): how much of the final pot came from interest rather than deposits. It is small for short goals and grows sharply beyond ten years, which is the case for starting early. First-time buyers under 40 should also look at the Lifetime ISA, where the government adds 25% to up to GBP 4,000 a year.
Source and further reading: MoneyHelper.