In this article
A goal without a number is a wish. “I want to buy a car” becomes a plan only when it says how much, by when, and how much to put away each month. The answer depends on one more thing: how much your savings can earn while they wait.
The formula
You do not have to do this by hand. The point is the shape: each extra year and each extra point of return reduce the monthly figure.
Returns trim the monthly amount by ₹2,800 to ₹3,900 here. Over just 5 years, the amount you save matters more than the rate.
About 83% is your own money. On a short goal, you are mostly saving, not investing.
Time is the cheapest lever
| Time | 0% | 7% | 10% |
|---|---|---|---|
| 3 years | ₹27,778 | ₹24,899 | ₹23,736 |
| 5 years | ₹16,667 | ₹13,887 | ₹12,807 |
| 7 years | ₹11,905 | ₹9,206 | ₹8,200 |
| 10 years | ₹8,333 | ₹5,744 | ₹4,841 |
The ringed cell is the 5-year, 7% case. Moving down a row (more years) helps far more than moving right (more return).
A 10-year goal at 7% needs only 41% of the monthly amount of a 5-year goal. If the date is flexible, moving it is the easiest way to make the plan fit your budget.
Match the place to the time
- Under 1 yearSavings account or liquid optionsStability matters more than return.
- 1 to 3 yearsFixed or recurring deposits, short-term debt optionsPredictable and low risk. Compare after-tax return with FD after tax and inflation.
- 3 to 5 yearsA mix of debt and some equitySome growth, but you must be able to cope with a dip near the date.
- 5 years or moreMore equity can make senseTime smooths out the ups and downs. Move to safer places as the date nears.
A plan that works
- Write down the goal in today’s rupees and the date.
- Add inflation if it is a big purchase. A ₹10 lakh car today may cost more in 5 years.
- Find the monthly amount using a realistic return, such as the safe rate for short goals.
- Set up an automatic transfer on salary day, to a separate account.
- Raise the amount every year when your pay rises. A step-up plan lowers the starting figure.
What if you are behind?
- Extend the date. Even 6 months can change the monthly amount a lot.
- Lower the target. A cheaper car or a smaller wedding budget is a real option.
- Add a lumpsum. A bonus or a refund can fill part of the gap. See what a lumpsum becomes.
- Do not chase higher returns. Taking big risk on a short deadline is how goals are lost.
Questions people ask
How much should I save per month for a goal?
Divide the goal by the number of months if it earns nothing. If it earns a return, use the future value of a monthly deposit formula, or a calculator.
How much per month to reach ₹10 lakh in 5 years?
About ₹16,667 with no return, ₹13,887 at 7% a year and ₹12,807 at 10% a year, assuming deposits at the start of each month.
Where should I keep money for a goal under 3 years?
In low-risk places such as savings accounts, fixed or recurring deposits and short-term debt options, because you cannot wait out a market fall.
Does a higher return help a lot on short goals?
Less than you would think. Over 5 years, your own deposits make up most of the final amount.
Should I include inflation?
Yes for big purchases. Estimate the future price and use that as your goal.