Image of girl saving income in personal piggy bank.

How Much Should You Save A Month?

Matt Cardwell6-Minute Read
UPDATED: June 02, 2024


We all know that we're supposed to set aside some of our monthly income to prepare for everything from retirement to college tuition or just a rainy day. What can be hard to figure out, though, is just how much we should be saving.

This article will give you an idea of how much you should save each month, as well as some tips on how to reach your savings goals.

How Much Money Should You Save Each Month?

Figuring out how much you should save can depend on a number of personal factors. Your answer might be different from a neighbor's, a friend's or even your sibling's, depending on things like your own family budget and future endeavors.

In order to know how much effort should go into saving for tomorrow, you should first try and understand where you are today.

By calculating your current savings, analyzing your household budget, and planning for both big purchases and retirement, you can get a better idea of how your personal finances stand and how aggressive you'll need to be moving forward.

You can do this by following these three steps:

1. Make A Budget

Regardless of what you make, how much you want to save, or where your money gets allocated each month, a strong budget is an important tool for any household that wants to meet certain financial goals. Making a budget for yourself requires setting personal spending limits and figuring out where to properly allocate your funds, but sticking to that budget can make reaching your monthly savings goals much easier.

2. Plan To Get Out Of Debt

If you're walking around with balances on credit cards, still owe on student loans or are trying to pay off a vehicle, paying off your debt can be an important first step to maximizing your saving efforts.

Monthly debt payments can feel frustrating, as they account for a portion of your income that could otherwise be allocated to savings. Whether you opt for debt-paying methods like the debt snowball or avalanche, turn to debt consolidation or utilize 0% balance transfer offers to pay off the balance(s) sooner, make a plan to get out of debt that makes sense for you.

Then, once you drop those balances, you can redirect that money toward savings each month.

3. Determine Future Plans

Are you saving for a down payment on a home? How much money do you need in retirement? Will you be paying for your child's college education? Do you have a family member with a disability to consider in your future financial planning?

Each family's future plans will look a bit different from the next. Before you can adequately start crunching the numbers, take some time to figure out what you're saving for and what you need to prioritize.

Get In Touch With Us.

Our friendly Personal Loan Experts are here to help!

How Much Of Your Income Should You Save?

There is no hard and fast rule about how much of your paycheck you should set aside each month. It mainly comes down to what you can afford to save and what you personally need to save.

For example, if you're behind on preparing for retirement, you may need to save more aggressively now to meet your goals. So even a 15% – 20% savings rate might not be enough to get you there. On the other hand, if you've been saving 75% of your paycheck for 20 years, you can probably afford to be a bit more lenient.

With all of that said, there is one general rule of thumb to consider when it comes to saving, especially if you have no idea where to start.

The 50/30/20 Budget Rule

The 50/30/20 rule is a simple calculation to find your household income. You simply take your after-tax income, allocating 50% for needs (such as your housing costs and food). Then, put 30% toward wants (like the cable bill) and 20% into savings.

Even if your numbers aren't perfectly split, aiming to spend less than half of your income on living expenses is always wise. And if you can put more than 20% into savings – spending less than 30% on those optional "wants" – you'll be doing even better.

Know How Much You Need To Save

There is more than one area of savings to consider when determining the amount of money you need to have set aside. Here's a look at where you should focus your efforts, and how much you should ideally have in savings.

Emergency Savings

Many American households may be unprepared for unexpected expenses, like something as simple as a faulty water heater or car trouble, or a major health emergency. Having to suddenly front one of these kinds of expenses could send someone spiraling into debt.

To avoid this, you should aim to have at least $1,000 saved in an easily accessible, emergency savings account. This emergency fund could provide you and your family with quick cash if something unexpected were to happen, so that you could avoid using a credit card.

Once you've set aside your initial $1,000, aim to also save up a safety net with about 3 – 6 months' worth of living expenses. This could help protect your family if an illness, injury or job loss were to occur that impacted your typical cash flow.

Average Retirement Savings

According to a recent survey by Northwestern Mutual, the average balance of millennials’ retirement savings is $63,300. Gen Xers were found to have an average of $98,900 saved for retirement, while adults of Gen Z have about $37,000 currently put away.

Baby boomers were found to have an average of $138,900 by the age of 60 in retirement funds, which is behind Fidelity’s recommended retirement guidelines by over $130,000. Fidelity recommends having around eight times the amount of your income saved by the time you’re 60 in order to retire comfortably.

To attain these retirement goals for yourself, it’s recommended you save 15% of your annual income from age 25 onward.

Minimum Percentage To Save Per Month

For some people, the idea of spending less than 50% of their income on housing costs and needs can seem impossible, and putting aside 20% (or more) for savings simply can't happen. It’s OK if this is the case, though.

The most important rule about saving is to start early and do what you can. Even if you just set aside 2% of your income each month, you’re still saving. You can always build that up over time, increasing your savings rate as you cut expenses, pay off debt or encounter financial windfalls.

Make it a rule to pay yourself first by putting money into savings before you begin spending your paycheck. That way, you ensure that it happens each and every month. You can also automate your savings so it's a hands-off process – the easier saving can be, the more likely you are to meet your goals.

Where To Keep Your Savings

Your emergency savings should be readily accessible, so it's recommended to keep those funds liquid. A high-yield savings account can be a great option for your emergency fund, and either that or certificates of deposit for your safety net funds.

Retirement savings should ideally be kept in a properly balanced investment portfolio where the funds can grow exponentially over time. The more your money can grow on its own, the less you will actively need to save to meet your goals.

FAQs About Saving Money Every Month

How much should I save by the time I’m 30?

According to Fidelity, most people should have the equivalent of their starting salary saved by the age of 30. This includes retirement savings and any investments.

How can I increase how much I save a month?

A great way to increase your savings is to increase your income with a new job or by taking on a side hustle if possible. If you get a raise at work, you can also put those additional funds into your savings instead of spending more.

How can I pay down my debts and save more?

As mentioned above, there are various ways to pay off debt, and common mistakes to avoid while doing so. If you think debt consolidation is your best bet, seeking a personal loan can be a fast and straightforward option.

Apply For A Personal Loan.

Explore your options today and see what's possible in one simple click.

Final Thoughts

It's not always easy to determine how much of your income you should save every month. The numbers will be different for everyone, and may even change over time. But knowing where you stand today and where you want to be tomorrow can help you decide your path going forward.

If you’re considering a personal loan for paying off your other debts with the goal of increasing your savings, you can get prequalified today with Rocket Loans℠ and see what rates you can get.

Ready To Improve Your Financial Life?

Apply for a personal loan today to consolidate your debt.

Matt Cardwell

Matt Cardwell is Editor-in-Chief and leads the Rocket Publishing House at Rocket Mortgage. During his nearly 15 years with Rocket Mortgage, Matt has occupied a diverse array of Marketing leadership roles, including leading and growing the company’s early digital and internet marketing efforts; Vice President of Marketing; Director of Social Media and Director of Business Channel Strategy.