Savings Goal / Sinking Fund — Plan by Date or Budget

How It Works (Quick Math)

We compound monthly. With monthly return r, months n, starting pot P₀, and monthly contribution PMT:

• Future value: FV = P₀(1+r)ⁿ + PMT·((1+r)ⁿ−1)/r (if r=0, then FV = P₀ + PMT·n)
• Solve PMT (plan by date): PMT = (FV − P₀(1+r)ⁿ)·r / ((1+r)ⁿ−1) (if r=0, PMT = (FV − P₀)/n)
• Solve n (plan by budget): n = ln((PMT + r·FV)/(PMT + r·P₀)) / ln(1+r) (if r=0, n = (FV − P₀)/PMT)
• Today’s money: divide by (1+i)ʸ with annual inflation i and years y.

How to Plan Your Savings (Clear Steps + Friendly Tips)

A good savings plan turns “someday” expenses into calm, manageable monthly habits. Whether you’re building an emergency fund, saving for a holiday, or creating multiple sinking funds (car insurance, gifts, annual bills), the key is to define a goal, choose a time frame, and automate contributions you can actually stick to.

1) Start with the foundation

• Emergency fund first: Aim for a small starter buffer (e.g., one month of essentials), then work toward three to six months.
• Pay high-interest debt: Prioritising repayments can deliver a “risk-free return” larger than most savings accounts.

2) Set SMART goals

Make each savings goal Specific, Measurable, Achievable, Relevant, and Time-bound. Example: “£3,000 for a June holiday next year.”

3) Pick a time frame and contribution

Short-term goals (under 2 years) are usually best kept in cash. Use this tool to plan by date (solves for monthly contribution) or by budget (estimates time). If inflation is a concern for longer goals, the “today’s money” view keeps expectations realistic.

4) Automate and separate

• Automate transfers: A standing order on payday removes friction.
• Use separate pots or envelopes: Keep goals distinct so you can see progress.
• Choose a suitable account: For cash goals, consider competitive rates and access.

5) Make it sustainable

• Right-size your budget: Small, consistent amounts beat heroic one-offs.
• Review quarterly: Update the plan if your timeline or income shifts.
• Expect seasonality: Build sinking funds for predictable spikes.

6) Track progress (and celebrate)

Use the progress bar and live chart to check milestones—25%, 50%, 75%—and keep momentum strong.

Educational note: General information only—this is not financial advice. Consider fees, taxes, and risk tolerance for your accounts or investments.