"I'm saving up for a house down payment," "I want an emergency fund," "I need €3,000 for a trip next year." These are common goals, but most people chase them by saving "whatever's left over" each month, without knowing whether that amount is enough — or whether they're over-contributing without needing to. There's a much more precise way to approach this.
The problem with saving "whatever's left over"
Saving without a concrete number in mind carries two opposite risks: falling short and missing your deadline, or being overly conservative and leaving money idle that you could have invested or enjoyed sooner. The solution is to flip the question: instead of asking "how much is left over?", ask "how much exactly do I need to contribute?"
The formula for your required monthly contribution
If you already have some capital saved and want to know how much to contribute each month to reach a goal within a given timeframe, the formula is:
Monthly contribution = (goal − grown initial capital) ÷ annuity factor
Where the grown initial capital is what your current money will become on its own, without adding anything else, thanks to the return you earn over that period. It sounds complex, but in practice you only need four inputs: your goal, your initial capital, the timeframe, and the expected return.
A practical example
Let's say you want to reach €20,000 in 10 years, starting from zero, with a 3% annual return:
| Input | Value |
|---|---|
| Goal | €20,000 |
| Initial capital | €0 |
| Timeframe | 10 years |
| Annual return | 3% |
| Required monthly contribution | ~€143 |
Of that final €20,000, about €17,175 will come out of your own pocket, and the rest — over €2,800 — comes from the return generated. The higher the return or the longer the timeframe, the smaller the share you have to put in yourself.
Why starting earlier reduces the monthly effort so much
Compound interest isn't linear: doubling the timeframe doesn't just double the return generated, it multiplies it. If you stretch the example above from 10 to 20 years while keeping the same €20,000 goal, the required monthly contribution doesn't drop to half — it drops much further, because the money has twice as long to grow on itself. Starting a year earlier almost always cuts your monthly effort more than it looks at first glance.
What return to use depending on where you save
The result depends entirely on the return you enter, so pick a realistic number for the type of product you'll actually use:
- Savings account or fixed-term deposit: 0-3% a year, with essentially no risk.
- Diversified investment portfolio (index funds, ETFs): can return more over the long term, but with short-term value swings that aren't ideal if you need the money on a fixed, near-term date.
As a rule of thumb, the shorter the timeframe or the more critical it is to have the money exactly when you need it (a house down payment, for instance), the less sense it makes to take on market risk.
The mistake of never revisiting your plan
A monthly contribution calculated today assumes you'll keep it constant for the whole timeframe. If your situation changes — a raise, an unexpected expense, a return very different from what you assumed — it's worth recalculating. This isn't a plan you set once and forget; it's a reference worth reviewing at least once a year.
Calculate your exact monthly contribution
Instead of estimating by eye, use our savings goal calculator with your own numbers: your goal, what you've already saved, your timeframe and your expected return. In seconds, you'll know exactly how much to contribute each month.