Suppose you wanted to save $50,000 before you retire in 10 years. You can earn 3.5% APR in an annuity product but you want to know given that interest rate how much money you need to put aside monthly to reach your savings goal. Excel's PMT Function is the tool you want to use.
The proper formula for your calculation would be:
=PMT(.035/12,120,50000)
Remember, you must divide the interest payment by the number of payments to be made in a year to convert it to a monthly interest factor and each argument in the function is separated by a comma.
In order to make the PMT function dynamic, you would want to store the argument values in cells within your worksheet and reference those cells in your function syntax as shown below. You would then be able to figure a variety of combinations of savings, time frames and interest rates.
So go ahead, set a savings goal for yourself and use Excel's PMT function to learn how much to put aside monthly. What are your waiting for, your future security is depending on you.
