Saving money is one of the most important elements of financial planning. Whether you’re planning for retirement, preparing for unexpected expenses, or working toward personal goals, setting aside money each month helps create a strong financial foundation. But many people still ask, “how much should I save monthly?”
There’s no one-size-fits-all answer. Your monthly savings plan depends on your income, spending, and goals. This guide will help you answer that question by breaking down how much you should save per month across a few key categories.
Saving for retirement
Planning for retirement starts with consistent savings. A good rule of thumb is to save at least 10% to 15% of your monthly income for retirement. This can be done through employer-sponsored plans like a 401(k) or individual retirement accounts (IRAs).
Use a retirement calculator to estimate how much you need based on your current salary, expenses, and the age you plan to retire. Financial experts often recommend aiming to save:
- 1x your salary by age 30
- 3x by age 40
- 8x by age 60
These benchmarks can guide your monthly saving goals, but remember to adjust based on your unique situation. Also, if your employer offers matching contributions, take full advantage—it’s essentially free money that helps your savings grow faster.
Saving for emergencies
An emergency fund is your financial safety net. If a job loss, car repair, or medical expense comes up, having savings available can keep you from relying on high-interest debt.
Start by saving $1,000 as a basic emergency fund. Then aim to build that up to cover three to six months of essential living expenses.
Not sure where to start? Add a line item in your monthly savings plan dedicated to emergencies. Even if you can only save $50 or $100 per month, it’s a step in the right direction.
Saving for personal goals
Once you’ve covered retirement and emergencies, turn your attention to personal goals like:
- A vacation
- Home renovation
- A wedding or major event
- College savings
It’s okay to be flexible here. Your monthly saving goals should reflect your priorities. If you’re working to pay off debt, that might take precedence. But once you have room in your budget, start setting aside a small amount for the things that matter to you.
The 50/30/20 budget rule is a helpful framework:
- 50% of income goes to needs
- 30% to wants
- 20% to savings and debt repayment
If you want to save more aggressively, consider increasing your savings percentage and trimming discretionary spending. The key is making consistent progress on your monthly savings goals.
Where to save your money
Choosing the right type of savings account depends on your goals:
- High-yield savings accounts are great for short-term goals. They offer higher interest rates and easy access to your cash.
- Certificates of deposit (CDs) work well for fixed savings periods but may charge penalties for early withdrawal.
- Investment accounts like IRAs or 529 plans are best for long-term growth, such as retirement or education savings.
Your monthly savings plan is more likely to succeed if you keep your savings organized. You can create separate savings accounts or use budgeting tools that allow you to track progress for each goal.
Tips for sticking to your monthly savings plan
Building a habit of saving takes time. Try these tips to stay consistent:
- Automate your savings: Set up automatic transfers to your savings account each payday.
- Track your progress: Use budgeting apps or spreadsheets to watch your money grow.
- Adjust as needed: Life changes. Revisit your plan regularly to stay on track.
- Celebrate milestones: Hit your savings target? Give yourself a small reward.
Creating a monthly savings plan doesn’t have to mean sacrificing all your fun. It’s about being intentional with your money and setting yourself up for success.
Read more: 10 of the Best Ways to Reduce Monthly Expenses
So, how much should I save per month?
The answer depends on your life stage and financial goals. If you’re just starting out, even saving 5% of your income is a strong start. As you earn more and reduce debt, increase your savings rate to build long-term security.
Use these rough guidelines:
- Retirement: 10% to 15% of income
- Emergency fund: $50 to $300 per month until fully funded
- Personal goals: Flexible based on your budget
Over time your goals may shift, and that’s okay. Keep refining your monthly savings plan to match your current needs.
The bottom line
Asking, “how much should I save monthly?” is an important first step to financial stability. Whether you’re saving for retirement, building an emergency fund, or working toward personal goals, a smart and flexible monthly savings plan could help you stay in control of your money.
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.
