How It Works

The PMT function, typically used for loan payments, works equally well in reverse - calculating how much you need to save monthly to reach a future goal. The key is using your goal as the future value.

Syntax

=PMT(rate, nper, pv, fv)

rate: Expected return per period (annual ÷ 12)
nper: Number of months until goal
pv: Current savings (negative - money you have)
fv: Goal amount (positive - money you want)

Example

Your Goal:

Target: $20,000 (emergency fund)
Timeline: 3 years (36 months)
Current Savings: $2,000
Expected Return: 4% (high-yield savings)

Formula: =PMT(4%/12, 36, -2000, 20000)

Result: -$476.84

You need to save $477/month to reach your goal.

Common Goals Calculator

Goal	Amount	Timeline	Starting	Return	Monthly Needed
Emergency Fund	$15,000	2 years	$1,000	4%	$560
Vacation	$5,000	12 months	$500	4%	$369
Down Payment	$50,000	5 years	$10,000	5%	$572
New Car	$25,000	3 years	$3,000	4%	$578

Formula for each: =PMT(E2/12, C2*12, -D2, B2)

Adjusting for Reality

If Result is Too High

Options:

Extend timeline: =PMT(rate/12, longer_months, -current, goal)
Lower goal: =PMT(rate/12, months, -current, smaller_goal)
Start with more: =PMT(rate/12, months, -higher_start, goal)

Finding Affordable Goal

If you can save $300/month, what can you reach in 2 years?

=FV(4%/12, 24, -300, -current_savings)

No Interest Scenario

For simple saving without returns:

=(goal - current_savings) / months

Example: $10,000 goal, $1,000 saved, 24 months:

=(10000-1000)/24 = $375/month

Building a Savings Calculator

Input	Value
Goal Amount	$20,000
Current Savings	$2,000
Months to Goal	36
Expected Return	4%

Output	Formula
Monthly Needed	`=PMT(B4/12, B3, -B2, B1)`
Total Contributed	`=ABS(B6)*B3+B2`
Interest Earned	`=B1-B7`

Multiple Goals Strategy

Prioritize and allocate savings:

Goal	Priority	Monthly	Timeline
Emergency Fund	1	$400	18 mo
Vacation	2	$150	12 mo
New Car	3	$200	30 mo
Total		$750

First focus on Priority 1, then shift that amount to Priority 2, etc.

The Impact of Starting Amount

Same $20,000 goal in 3 years at 4%:

Starting With	Monthly Needed
$0	$523
$2,000	$477
$5,000	$407
$10,000	$267

Every $1,000 you start with reduces monthly savings by ~$23.

Pro Tips

Add buffer - save 10% more than calculated for unexpected shortfalls
Automate transfers - set up automatic savings on payday
Use separate accounts - one savings account per goal helps track progress
Review quarterly - market changes or life changes may require adjustments
Round up - if calculation shows $476.84, save $500

Common Errors

Positive result: Make sure current savings is negative in the formula
#NUM! error: Goal might be unreachable in timeline with given parameters
Forgetting compounding: Using simple division underestimates what you need

Required Monthly Savings