Selurio · Blog
How Much to Save Each Month to Reach Your Goal
Most calculators start from the contribution and tell you how much you'll have at the end. But life usually asks the question the other way around: "I want €50,000 for a down payment in 10 years — how much do I need to set aside every month?" That is the reverse calculation, and it is far more useful for planning.
This article explains how to calculate the monthly contribution you need, why the return does part of the work for you, and how the time horizon changes everything.
Turn the question around
The classic savings-goal calculation has four quantities: the goal, what you already have, the time horizon and the expected return. Fix three of them, and the fourth — the monthly contribution — can be computed.
The idea in two steps:
- Your current savings grow on their own until the end of the horizon (compound interest).
- The rest of the way to the goal is covered by equal monthly contributions, which also earn interest.
Monthly contribution needed = remaining × i / ((1 + i)ⁿ − 1)
where remaining is the goal minus your grown current savings, i is the monthly return (the annual one / 12), and n is the number of months.
Example
Goal €50,000, you already have €5,000, horizon 10 years, expected return 5% a year.
- The current €5,000 grows to about €8,200 over 10 years.
- That leaves about €41,800 to be covered by contributions.
- The monthly contribution needed comes out to about €270.
Notice: over 10 years you put in about €32,400 through contributions, yet you reach €50,000. The difference — nearly €9,000 — is made by the return. The longer the horizon, the larger the share the market carries instead of your pocket.
Work out your own goal in the "how much to save each month" calculator — change the horizon and see how much the monthly contribution drops when you start earlier.
Why an early start lowers the effort
Here is perhaps the most important lesson. The same €50,000 goal at 5% return requires a dramatically different monthly contribution depending on the horizon:
| Horizon | Monthly contribution needed (approximate) |
|---|---|
| 5 years | ≈ €641 |
| 10 years | ≈ €270 |
| 20 years | ≈ €90 |
Double the horizon and the monthly effort drops several times over, because you give compound interest more time to work. This is the same logic that drives compound interest: time is a stronger lever than the size of the contribution.
How to set the contribution aside in practice
The calculated contribution is only good if it actually goes in every month. The two principles that make that reliable:
- Automate it. Set up an automatic transfer on payday — see how to automate your investing.
- Invest regularly, not in one lump on a hunch. This is the DCA strategy — why regular investing beats timing.
If your goal is more ambitious than a single purchase — for example, living off your investments — that is the heart of financial independence (FIRE).
Assumptions and caveats
- A constant return. Real markets fluctuate; 5% is an averaged assumption, not a guarantee.
- No taxes or inflation. €50,000 in 10 years will not have the same purchasing power as today — see real return.
- Discipline. The calculation assumes the contribution goes in every month without gaps.
Continue reading
- Compound interest — the 8th wonder — why the horizon is the strongest lever.
- DCA: regular investing in practice — how to put the contribution in.
- Emergency fund — the first goal, before the long-term ones.
- Investing for beginners — the complete plan.
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