How much to save per month: building a savings plan that holds up

"How much should I save each month?" has no universal answer, but it has a method. Start from the horizon, work out what the contribution buys you, and check what happens if you start later than planned. This guide runs those three steps with real numbers and ends with the things a calculator cannot tell you.

Start with the horizon, not the amount

The horizon is the one input you usually know. Retirement in twenty-eight years, a deposit on a flat in six, a car in three. It is also the input with the most leverage, because it sits in the exponent of the compound interest formula while the contribution only scales the result linearly.

Fixing the horizon first also fixes what kind of assets are reasonable. A three-year horizon and an assumed 7 % return are not compatible: the range of possible outcomes over three years is far wider than the average return. Long horizons let you assume more, and they are what make a savings plan work at all.

What different monthly amounts add up to

Twenty-five years, 6 % a year, nothing to start with, contributions every month. The interesting column is not the last one — it is the split between what you paid in and what the interest added.

Two things are worth noticing. First, the relationship is exactly linear in the contribution: doubling the monthly amount doubles every column. That makes planning easy — work out one row and scale it. Second, in every row the interest exceeds the deposits. Over twenty-five years at 6 %, roughly 57 % of the final balance was never your money.

The cost of starting five years later

The linearity above breaks as soon as you move the start date, and that asymmetry is the whole argument for beginning before the plan is perfect. Here is 300 € a month over a thirty-year window, with the contributions starting immediately, after five years, and after ten.

Waiting five years saves 18,000 € in contributions and costs 92,323 € in final balance — a little over five euros lost for every euro not paid in. Waiting ten years saves 36,000 € and costs 161,312 €. The exchange rate is terrible, and it gets worse the longer the total horizon.

The practical reading: a small contribution started now beats a large contribution started once your finances feel settled. You can always raise the amount later; you cannot buy back the years.

When interest overtakes your contributions

In a monthly savings plan the balance is almost entirely your own money for a long time. The crossover — the point where cumulative interest exceeds cumulative contributions — arrives later than most people expect. With steady monthly contributions it falls in year 21 at 6 %, in year 16 at 8 %, and not until year 32 at 4 %.

• Before the crossover, your savings rate drives the outcome. Increasing the contribution has more effect than any change to the assumed return.
• After the crossover, the return drives the outcome. Increasing the contribution barely moves the final figure.
• This is why the last decade of a savings plan feels like it does nothing and then does everything.

It also explains why a plan should not be judged after five years. Five years in, the balance is roughly what you paid in plus a little. That is not the plan failing — it is the plan working exactly as the arithmetic says it will.

Raising the contribution over time

A fixed nominal contribution loses purchasing power every year. Raising it in line with your income keeps the plan's real weight constant and adds a surprising amount over a long horizon. In this calculator you can model that as separate contribution periods with different amounts.

Note the limit: this calculator allows up to three contribution periods. That is enough to model a career in coarse steps, which is as much precision as a thirty-year projection deserves anyway.

What the calculator cannot tell you

The projection assumes a constant return. Reality does not deliver one, and the difference matters in three specific ways.

1. The order of the years. During a savings phase a bad early decade is survivable and can even help, because you buy more for the same contribution. During a withdrawal phase the same sequence is far more damaging.
2. Fees and taxes. Both reduce the effective return, and the reduction compounds. Run your plan again with the return lowered by your actual annual cost before believing the headline number.
3. Your own behaviour. The most common reason a savings plan fails is that the contribution stops, not that the market underperformed. A contribution you can sustain through a bad year beats a larger one you abandon.

None of this is an argument against projecting. It is an argument for reading the projection as a range, and for writing down which assumption you would revisit first if the balance drifted away from the line.

A procedure that works

1. Write down the horizon in years and the target amount, if you have one.
2. Set the return you are willing to defend, then subtract your annual costs from it.
3. Solve for the contribution: try a figure, read the final balance, scale linearly to the target.
4. Re-run with the return two percentage points lower. If the plan only works at the optimistic rate, it is not a plan.
5. Re-run with the start delayed by a year. That number tells you how urgent the first contribution is.
6. Set a review date. Once a year is enough; more often invites tinkering.

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