Savings Goal Calculator

Formula (with compound interest): n = log(FV/PV + r×PMT/r) / log(1+r), where FV = goal, PV = current balance, r = monthly rate (annual%/12/100), PMT = monthly contribution. Simplified (no interest, just saving): Months = (Goal − Current balance) / Monthly savings. Example: Goal $10,000, current $2,000, save $500/month at 4% APY → monthly rate = 0.333%, n = about 16.3 months. The interest accelerates your savings, especially for longer timelines.

An emergency fund is 3–6 months of living expenses in liquid savings (savings account, HYSA). Purpose: cushion against job loss, medical emergency, car repair, or unexpected expenses. Without it: you'd have to take on debt (credit cards at 20%+ APR) or liquidate investments at a bad time. How much: Single, stable job, no dependents: 3 months expenses. Family, variable income, or self-employed: 6+ months. Example: $4,000/month expenses → emergency fund = $12,000–$24,000. Priority: build emergency fund BEFORE aggressively investing (except for 401k matching).

Account types by typical APY (2024): Traditional bank savings: 0.01–0.5%. High-yield savings account (HYSA): 4–5.5% (SoFi, Marcus, Ally, Discover, etc.). Money market accounts: 4–5%. CDs (certificates of deposit): 4.5–5.5% (locked for 3–24 months). I-Bonds (inflation-linked): 4–7% (limited to $10k/year per person). T-Bills (3-month): ~5.3%. Key: for short-term goals (< 3 years), keep in HYSA or CDs. For longer term goals, invest in index funds for higher returns despite volatility.

APY (Annual Percentage Yield): includes compounding — the effective annual return. APR (Annual Percentage Rate): the stated rate before compounding. For savings: banks advertise APY (higher number is better for savers). For loans: banks advertise APR (lower number is better for borrowers). Formula: APY = (1 + APR/n)^n − 1, where n = compounding periods per year. Example: 5% APR compounded monthly → APY = (1 + 0.05/12)^12 − 1 = 5.116% APY. Most savings accounts compound daily, which maximizes APY.

Financial priority order (general guidance): 1. Emergency fund (1 month expenses minimum to start). 2. Employer 401k match (free money — always capture this first). 3. High-interest debt (credit cards, personal loans > 7%). 4. Full emergency fund (3–6 months). 5. Max tax-advantaged accounts (IRA, HSA, 401k). 6. Medium-term goals (house down payment, car, education). 7. Taxable investment accounts. 8. Additional savings / discretionary. This order maximizes net worth by eliminating expensive debt while capturing guaranteed returns (employer match).