What will it take to save for a vehicle, home, etc.?

Amount you need

Amount you have deposited

Amount you can save monthly

Months you wish to save

Your savings rate

Your federal tax rate

Your state tax rate

"What will it take to save for a vehicle, home, etc.?" calculates different combinations to save a lump-sum amount that you intend to use to buy a vehicle, home, or other big-ticket item.

You designate how much you currently have saved towards your goal, monthly savings amount, number of months you expect to save, and savings interest rate. Inflation is ignored in this calculator.

Because you enter income tax rates, the calculator assumes you save with a taxable account. If you want to simulate saving with a tax-advantaged account, enter a zero in the fields for federal and state income tax rates. (Tax-advantaged accounts may have restrictions on taking early penalty-free distributions. You may wish to consult a financial professional.)

Lump-sum investments:A lump-sum investment is an investment that you make to open an investment or savings account. It is used to jump-start an investment or savings account. Possible sources of lump-sum investments include inheritances, lump-sum distributions from retirement plans and proceeds from a life insurance policy.

Taxable account:A taxable account is an account that does not receive the tax breaks that either a tax-exempt account or tax-deferred account are eligible to receive. (Both of these accounts are called tax-advantaged accounts. Tax-advantaged accounts are authorized by the IRS as investment vehicles to save for your retirement or the retirements of investors.)

Compounded interest:Compounded interest is the interest that you earn on a deposit or investment that uses compounding. Banks and financial institutions routinely use compounding to pay you a higher interest rate. For example, a bank may be offering a CD that pays interest at 10%. If the bank does not compound interest, you will receive 10% of your investment as interest income at the end of a year. But if the bank compounds interest every three months, you will earn an interest rate of 10.38%. If the bank compounds interest monthly, you will earn 10.47%. And if it compounds daily, you will earn 10.52%. For a $10,000 deposit, this is an extra $52 in interest that you earn.

Savings interest rate:The savings interest rate is the yearly interest rate you earn on your savings. It is also used to calculate the opportunity cost of paying with cash. In contrast, the saving rate is the percentage of income you save.

Tax-advantaged account:A tax-advantaged account is an investment account with tax-deferred or tax-exempt features. The Internal Revenue Service authorizes the use of tax-advantaged accounts. These accounts are used to save for retirement or college and other educational expenses. Tax-advantaged accounts are tax-exempt until you take money out of the account. In some cases, distributions are tax-exempt provided the account holder meet certain conditions or the money is spent a certain way. In other cases, the entire amount of the distribution is taxable.