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Saving and investing basics

Savings goal

A specific amount you plan to save by a set date for one purpose, which turns into a monthly or per-paycheck amount to set aside.

What It Means

A savings goal is a target for one purpose, with an amount and a date: $3,000 for a car down paymentDown paymentThe share of a home's price you pay upfront in cash when you buy it; the mortgage covers the rest. See more by next fall, for example. Dividing what's left to save by the months until the date gives the amount to put aside each month. The Consumer Financial Protection Bureau (CFPB) builds its "My new money goal" worksheet on exactly those questions: what you're saving for, how much, and by when.

Try It: See When You'll Reach a Savings Goal

Enter a goal, what you've saved so far and what you can add each month.

Still to save$2,400
Months to reach it12
Same pace, every two weeks$92.31
Progress: 20%

How People Say It

  • "Our goal is three grand for the car by October."
  • "I'm at about 20% of my savings goal."
  • "If I bump it to $300 a month, I'm there by spring."

The Breakdown

Worked example. Sam wants $3,000 for a used car's down payment and already has $600 saved, leaving $2,400:

Saved each monthMonths to the goalEvery-two-weeks equivalent
$15016$69.23
$20012$92.31
$3008$138.46

These leave out interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more. On a short goal in a savings accountSavings accountA bank or credit union account for money you're setting aside for later, which earns interest and is insured up to federal limits at insured institutions. See more, interest makes only a small difference.

What the result means. The monthly amount and the date move together, so if $200 is too much, the honest choices are a later date or a smaller goal. Test the amount for a month before committing, then make it automatic.

How to set one

  1. Name the goal and the amount, using a real price or quote.
  2. Pick a date, and count the months until then.
  3. Subtract what you've saved and divide by the months.
  4. Try it for one month, compare what really happened, and adjust.
  5. Set up an automatic transfer on payday.

Good to Know

The CFPB suggests running a new saving plan for a month, checkingChecking accountA bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit. See more your real spending and saving against it, and adjusting before you commit, then having your bank move the money from checking to savings automatically. For money you'll need within a few years, a federally insured savings account keeps it safe and reachable. Investor.gov, run by the U.S. Securities and Exchange Commission, has a savings goal calculator that adds compound interestCompound interestInterest paid on your original amount and on the interest it has already earned, so each year's interest is a little bigger than the last. See more, which matters more for long goals where money may be invested.

FAQ

How do I calculate how much to save each month?

Subtract what you've already saved from the goal, then divide by the number of months until you need the money. $2,400 over 12 months is $200 a month.

What's a good savings goal to start with?

Many people start with a small emergency fundEmergency fundMoney set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly. See more or one upcoming expense, since a near date keeps the monthly amount concrete. The CFPB's worksheet starts by asking what you're saving for and by when.

Should I have more than one savings goal at a time?

You can. Add up the monthly amounts for all of them and check the total against what's left in your budgetBudgetA plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it. See more after bills, then fund the most urgent first.

Do It in Buhata

Goals

With Plus, create the goal in Goals with its amount and date, and update the saved amount each payday so its progress shows.

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Related Terms and Categories

  • Financial goals

    Specific targets for your money, such as an emergency fund, paying off a card or a down payment, each with an amount and a date.

  • Automatic savings

    Saving that happens on a schedule without a decision each time, through a split direct deposit or a recurring transfer from checking to savings.

  • Sinking fund

    Money set aside in small, regular amounts for a known future cost, so the bill doesn't land on a single paycheck.

  • Emergency fund

    Money set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly.

  • Pay yourself first

    Moving a set amount into savings as soon as you're paid, before bills or spending, so saving comes first instead of from what's left.

  • High-yield savings account

    A savings account paying a variable interest rate that's generally higher than a traditional savings account's, often offered by online banks.

Saving and investing basics

Sources

Consumer Financial Protection Bureau, "Financial planning worksheet: My new money goal"; CFPB, "Set a goal, make a plan, and save automatically"; Investor.gov (U.S. Securities and Exchange Commission), "Savings Goal Calculator"

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