Savings
Big Purchase Savings Plan
Find the monthly amount that gets you to a big purchase on time, and what saving first saves you compared with financing it.
What this means
Setting aside $202.98 a month gets you to $3,000 in 12 months, with about $64 of that coming from the account's interest instead of your pocket.
Financing the same $2,500 at 22% over the same months would run $233.99 a month and cost about $308 in interest. Saving first, you keep that, plus the interest you earn: $372 in all.
The payments look similar on purpose: it’s the same item over the same months. The difference is which side of the interest you’re on.
These are estimates to help you think, not personalized legal, tax, or investment advice, and not a promise of any result.
This calculator plans a big purchase (a couch, a used car, new tires, a furnace you can see coming) from two sides. Enter the price, what you've set aside, how many months you have and what your savings account pays, and it shows the monthly amount that gets you there on time. Then it prices the other route: financing the same amount over the same months at the rate you enter.
Why it matters: the monthly numbers on the two routes often look close, which is what makes financing feel harmless. The difference is which side of the interest you're on. Saving first, the account pays you. Financing, you pay the lender. This page puts a dollar figure on that gap.
How to use it
Price it all the way out
Use the out-the-door price: tax, delivery, installation, the warranty if you'll buy it. Then enter what you've already set aside for it.
Pick a date and your savings yield
Enter the months until you want to buy and the APY your savings account pays. The yield is an assumption. Rates move, so check what your account pays now.
Compare it with financing
Enter the APR you'd likely be offered: a store card, a personal loan, dealer financing. The calculator borrows only what you haven't saved, over the same months, and shows the interest and how far ahead saving first comes out.
Behind the numbers
Interest can work for you or against you
In a savings account, interest is added to your balance, so each deposit you make does a little more than its face value. On a loan, interest is added to what you owe. Same item, same months, opposite direction.
APY and APR aren't the same kind of rate
A savings APY already includes monthly compounding, so the calculator takes its twelfth root to get a monthly rate. A loan APR is a yearly rate divided into twelve monthly ones. The calculator handles both correctly, which is why you can't compare the two percentages directly by eye.
Saving first keeps your options open
A savings plan can pause, shrink, or change its mind. A loan can't. If the car needs a repair halfway through, you can borrow from your own plan instead of falling behind on a payment.
The math behind it
Your savings grow two ways: what you've already saved compounds at the monthly rate, and each monthly deposit compounds from the month it goes in. The calculator works that backwards from the price to find the monthly amount, rounded up to the cent. For financing, it uses the standard loan payment on whatever you haven't saved, over the same months, and adds up the interest.
Worked example
A $3,000 purchase with $500 saved, 12 months away, in an account paying 4% APY takes about $202.98 a month, with about $64 of the total coming from interest. Financing the $2,500 gap at 22% APR over the same 12 months runs about $233.99 a month and about $308 in interest. Saving first comes out ahead by about $372.
Half the rate, roughly
On a loan paid down evenly over a year or two, the interest comes to about half the APR times the amount borrowed times the years, because on average you owe about half of it. $2,500 at 22% for one year: half of 22% is 11%, and 11% of $2,500 is $275, close to the $308 the exact math gives. A quick check before you sign.
Common questions
Is 0% financing better than saving?
At a true 0% with no fees, the loan costs no interest, so the main difference is the interest your savings earn in the meantime and the flexibility you keep. Read the terms closely: some 0% offers charge all the deferred interest back if any balance is left when the promo ends.
Why does interest only lower my monthly amount a little?
On a short timeline, savings interest is modest. Most of the money has only been in the account a few months. It still adds up, and it's money on your side of the ledger rather than the lender's.
Should I use my emergency fund for this?
Usually not. A planned purchase isn't an emergency. Keeping the two in separate accounts means buying the item doesn't leave you exposed the week something actually goes wrong.
Go deeper
The calculator gives you a number. The Consumer Decisions & Big Purchases Brick teaches you what to do with it, in plain English. And if you’re not sure where to start, the free BrickScore Assessment checks your whole foundation in about 5 minutes.
first the number, then the move