How Much Should You Save Each Month

Money, as the saying goes, doesn't grow on trees. For many of us, cultivating a healthy financial ecosystem means diligently saving each month. But how do you determine the right amount to stash away when faced with a plethora of expenses and the allure of current day pleasures? This post aims to demystify the nebulous concept of 'savings goals' and provide actionable insights for establishing and maintaining your monthly savings routine.


In a world that often encourages immediate gratification over long-term security, conscientious saving can become a beacon of financial intelligence. Yet, the process of saving money is often shrouded in subjective complexities. What's the right amount to save, and how can one be sure they're not saving too little or too much? The answers are as varied as the individuals asking the questions, but they do lie within a structured approach to personal finance.

Determining Your Savings Goals

Before you can calculate a dollar amount, it's vital to establish what you're saving for. Short-term goals like vacations or a down payment on a new car require a different approach than a long-term goal such as retirement. A rule of thumb suggests aiming to save at least 20% of your total net income, but this can fluctuate based on your particular circumstances.

Understanding Short-Term vs. Long-Term Objectives

Short-term goals are those you aim to achieve within a year or two. Typically, these don't require complex investment planning and should primarily be stored in accessible, low-risk savings accounts. Long-term goals, on the other hand, can tolerate more risk and may include contributions to retirement accounts or higher return investment vehicles.

Calculating Your Savings Rate

To calculate your monthly savings rate, start by listing your monthly after-tax income. Next, categorize your expenses into needs, wants, and savings. Needs include rent, food, and utilities; wants capture those discretionary expenses like dining out or entertainment. Your monthly savings goal can then be crafted from what's left, ideally prioritizing a high-interest savings account for better returns.

Strategies for Saving

Brainstorming about savings is easy; the challenge lies in execution. Here are some robust strategies to ensure your savings plan doesn't gather dust on the mental shelf.

Budgeting Tips and Tools

An intelligently structured budget is the foundation of savings. Tools like spreadsheets, apps, or the envelope system can help you track where every dollar of your income goes. Create budgets that are realistic and fit your lifestyle, as overly stringent plans can be hard to maintain.

Automating Savings Contributions

Human nature often lends itself to procrastination when deferred 'til later. The solution? Automate your savings. Setup recurring transfers the day after payday to mimic a “pay yourself first” strategy. Out of sight, out of mind—but delightfully accruing interest.

Setting Up Emergency Funds and Investment Accounts

An emergency fund, while technically a subset of savings, is crucial. It acts as a financial safety net and should contain 3-6 months' worth of living expenses. Simultaneously, open investment accounts where appropriate to ensure your money is working for you.

Adapting to Life Changes

Life is a dynamic confluence of unpredictabilities, and your saving strategy should be just as flexible. When a life event alters your income or expenses, it's time to reassess and adapt your savings goals.

Adjusting Savings Goals with Life Events

A new job might bring a salary spike, while a child will almost certainly bring new expenses. The birth of a grandchild? Maybe the start of a college fund. Be ready to adjust your saving strategies to new circumstances and priorities.

Strategies to Stay on Track During Financial Challenges

Maybe your car suddenly needs a costly repair, or a global pandemic disrupts your industry. Tough times might warrant pressing pause on some long-term saving but even contributing a small, symbolic amount to your savings can help maintain discipline and the habit.


The act of saving money is one of the most powerful tools in personal finance. It's not merely about accumulating wealth; it's about creating safety, security, and peace of mind. Although the question of how much to save each month is deeply personal and contingent on numerous factors, the important thing is to start. Small amounts have more significance than you might realize, especially when invested over time. Take this as your gentle nudge to map out your savings goals, put plans into action, and cultivate a brighter financial future. Remember, it's not just about the numbers—it's about the habit of saving and the peace of mind it can incur.