Working backwards from a goal
Most saving has a deadline: a school term that starts in September, a family wedding, flights for the summer. This calculator starts from that deadline and works backwards to a monthly figure, which is the number you can actually act on by setting up a transfer. It answers two questions. How much do I need to save each month to have this amount by this date? And if I can only manage a certain amount, when will I get there? It is different from our compound interest calculator, which starts from the deposits you choose and shows what they grow into over a number of years; use that one when you want to see long-term growth, and this one when the amount and the date are fixed.
The maths behind the answer
The calculator assumes you pay in the same amount at the end of every month and that the account compounds monthly, so the monthly rate is the annual rate divided by 12. After n months, a starting balance P and a monthly deposit D are worth P(1 + i)^n + D((1 + i)^n − 1) / i. Solving that for D gives the monthly saving; solving it for n gives the number of months, which is always rounded up to the next whole month, because the goal is not reached until that month's deposit is in. At 0% the formula reduces to simple division: what you still need divided by the months left. The target date is counted in whole months from today, and a part month does not count, so the plan errs on the safe side.
Planning common goals for expats in the Gulf
School fees are usually paid per term or per year, so plan each payment as its own goal with its own due date, using the amount on the school's published fee schedule rather than a guess. For a trip home, add up tickets for everyone travelling, gifts and spending money, and set the date a few weeks before you need to book. For Hajj or Umrah, build the total from the package quotes you receive with our Hajj and Umrah cost calculator, then come back here for the monthly figure. If the cost will be paid in another currency, such as fees back home in rupees, choose that currency for the goal and convert your monthly saving at the rate you get when you send money, remembering that rates move over time.
Interest, profit and what is left out
If your money sits in cash or a current account, leave the rate empty and the answer is simple division. If it is in a savings account or a deposit that pays interest or an expected profit rate, enter the annual rate the bank quotes; a rate that can change makes the result an estimate, so check it again every few months. The plan does not include bank fees, tax, inflation or exchange-rate changes, and it assumes you never miss a month. Before you commit to a monthly figure, check it fits next to your rent and other fixed costs: the rent affordability calculator helps you see how much of your salary is already spoken for.