This calculator works backwards from your goal: given a target amount, a timeframe, any existing savings, and an interest rate, it finds the monthly contribution needed to get there. The interest rate compounds monthly, so your existing savings and each monthly payment start earning interest immediately. Even a modest rate makes a meaningful difference over several years — a 4.5% rate on a three-year goal reduces the required monthly saving by roughly 7% compared to keeping the money under the mattress.
The interest rate to use depends on where you're saving. Easy-access savings accounts and cash ISAs typically offer 3–5% at current rates, though this varies and can change. Fixed-term bonds may offer slightly more in exchange for locking your money away. If you're saving into investments rather than cash, returns are less predictable — use a conservative estimate and revisit the calculation annually. For goals within one to two years, the interest effect is small enough that the exact rate matters less than the consistency of your contributions.