How Much Should I Save Every Month (according to your goals)

When it comes to savings, there are no set rules—it depends on your personal goals and financial situation. But the important thing is to just get started. 

20% is a Solid Goal (But Not a Rule)

In my book, I Will Teach You To Be Rich, I recommend the 50/30/20 rule for budgeting. This framework is designed to set you up right for your Rich Life. 

Here's how the rule works: 

• 50% of your gross salary goes to fixed costs (e.g., housing, utilities, food, etc.) 
• 30% is allocated for savings and investments (e.g., emergency fund, retirement, bonds, etc.)
• 20% is reserved for guilt-free spending (e.g., dining out, hobbies, subscription services, etc.)

This structure balances financial security with your current lifestyle needs, allowing you to build long-term wealth while still enjoying life in the present.

But do take note, this allocation works best if you’re debt-free or carrying debt with manageable interest rates. If you’re facing high-interest debt, tackling that should become your main priority.

What if you can’t save 20%?

While it’s recommended to save at least 20%, that’s not always realistic, especially if you’re managing debt or have larger financial commitments. But that doesn’t mean all is lost. Here’s what you can do:

Start with what you can

It doesn’t make sense to aim for 20% if you’re struggling to pay your bills and putting your credit score at risk. Remember, any amount saved is better than nothing. Even setting aside just 1% of your income can help you build the habit and create momentum. The key is to begin rather than wait until you can hit a specific percentage.

If you’re serious about hitting your savings goals, build a Conscious Spending Plan. It helps you identify areas where you can free up money for savings without sacrificing the things that matter most to you. 

Work toward small increases each quarter

Even if you're not saving 10% yet, you can start small. Start by saving 1%, then increase it to 2%, then 5%, and continue building from there. Before you know it, you have worked your way up to your ideal goal of 20%. 

By making incremental increases every few months—even just by 1%—you can create change that feels almost unnoticeable in your daily life, yet adds up significantly over time.

Setting calendar reminders to review and bump up your savings rate periodically can help keep you on track. Small, consistent improvements can compound over time, growing what seems like a modest effort into substantial savings.

Focus on earning more if expenses are already tight

When your budget is already lean, increasing your income is often the most effective way to boost your savings.

This could mean negotiating a raise, starting a side hustle, or monetizing skills you already have. The key is to create an additional income stream that you can dedicate specifically to your savings goals. 

While working on increasing your income, try to maintain your current savings rate so that the extra earnings don't quietly disappear into lifestyle inflation. 

I often say, “There is a limit to how much you can save, but there’s no limit to how much you can earn.” If you’re ready to take action, here are some guides to help you get started:

• When to Ask for a Raise (+ tips to make sure you get one)
• 50+ Best Side Hustle Ideas to Make Money Fast (+ #1 Secret)
• Hobbies that Make Money: Turning Your Hobbies into Cash

There’s No One-Size-Fits-All Number—Here’s What to Do Instead

The ideal savings rate can vary dramatically based on your age, income, location, family obligations, and overall financial picture.

Some financial experts recommend saving 10% of your income each month. But that number isn’t grounded in any real data, it’s just simple and easy to remember. A better approach is to get clear on what you’re saving for and work backward from there.

Your life stage also plays a big role in how much you should save. Priorities in your 20s will likely look very different from those in your 40s or 60s. That’s why your savings strategy should evolve over time.

Instead of chasing a one-size-fits-all percentage, focus on building a personalized savings plan based on your current reality and future aspirations. 

To learn more about how to align your savings and investments with your age and life stage, check out my guide on asset allocation by age.

Start With Your Goals: What Are You Actually Saving For?

To put your savings plan into action, begin by identifying what you're saving for. Once you have clarity, allocate appropriate amounts toward your short-, medium-, and long-term goals.

Emergency savings

Before focusing on any other financial goals, building an emergency fund should be your number one priority. While some experts recommend saving three to six months of living expenses, I personally push my savings to 12 months' worth of income in cash. This financial cushion helps reduce stress during unexpected events like a global pandemic, a market crash, or a job loss. 

Your emergency fund should be kept in a highly liquid, easily accessible account, even if that means earning lower interest than other savings options. 

I always advise building this fund first because it forms the foundation for all other financial planning and goals.

Short- and medium-term goals

Short- or medium-term savings are meant for things you need to save up for within the next few months or years. This is different from future-proofing your finances through retirement savings. The goal here is to save money that you'll intentionally spend on something specific.

Short-term goals like vacations, new electronics, or holiday gifts typically require three to twelve months of saving, depending on the cost. Medium-term goals such as a down payment for your home, a car purchase, or a major home renovation usually take one to five years of consistent contributions.

To hit these targets, set clear, SMART goals so you can work backward. It’s a simple process: calculate the total amount you need, divide it by the number of months until the deadline, and you’ll know exactly how much to save each month.

Retirement savings

If you want to have $2 million at retirement and you're only starting to save for it at the age of 35, $100 a month isn't going to cut it. Use myretirement calculator to work out your minimum monthly contribution, and utilize products such as traditional and Roth IRAs and your 401(k) to your advantage.

Most financial planners suggest aiming to replace 70-80% of your pre-retirement income through various retirement income sources. The earlier you start building your retirement savings, the lower your required monthly contribution, thanks to the power of compound interest.

Employer matches on retirement contributions are essentially additional free money that further boosts your savings, so this should be prioritized up to the maximum matching percentage.

If you’re focused on building your retirement funds, here are some of my helpful guides:

• My Simple Retirement Guide (real-life story inside)
• How Much Money Should You Have in Your 401k (saving by age)

Just-for-fun savings (aka guilt-free spending)

Savings don’t have to be reserved only for serious commitments. Setting aside money specifically for enjoyment creates a sense of freedom within a structured financial plan. When you have dedicated funds for hobbies, entertainment, or even small treats, you avoid letting these expenses derail your bigger financial goals.

By allocating part of your income to guilt-free spending, you also remove FOMO from your life. It gives you the motivation to stick with your long-term savings goals, without the feeling of deprivation that can lead to impulse spending or abandoning your savings habits altogether. 

Many people carry deep-seated guilt or shame around spending, and that can snowball into unnecessary anxiety and avoidance around managing money. Take Lindsey and Sheena, for example, who I spoke with on my podcast and struggled with guilt-free spending:

Unless you’re completely stretched, allocating even just 5% of your income for guilt-free spending is a powerful way to enjoy your day-to-day life while still building strong savings habits for your bigger financial goals.

How Much to Save from Each Paycheck

If you’re still unsure how much to save, here’s a simple guide to help you decide, based on your income and financial goals.

If you're just starting out:

Either you just landed a steady paycheck or finally decided it’s time to start saving, start with a modest goal, like 5% of each paycheck. This helps you build a savings habit without overwhelming your budget. 

Focus on building an emergency fund first. Aim for an initial target of $1,000, then gradually work toward covering several months of living expenses. Be sure to take full advantage of any employer retirement matching programs, as this is essentially free money and can instantly boost your savings rate.

Set up automated transfers to your savings account on payday. This keeps your savings consistent and removes the temptation to spend what you intended to save.

If you’re paying off debt:

To decide where your money should go, compare the interest you're paying on your debt and the interest you're earning on your savings. If your debt has a higher interest rate, it usually makes more sense to pay that off first.

Always focus on clearing high-interest debt (especially credit cards) before maximizing savings beyond emergency funds, because paying off that debt guarantees a “return” equal to the interest rate you're avoiding.

Let’s say you have a $10,000 credit card balance at 12.5% interest. Paying $335 monthly would take 36 months and cost you $2,040 in interest. Bump your payment up to $435, and you’ll clear it in 27 months, saving $549 in interest.

Regardless, consider maintaining a minimum savings rate of 5% during this time. It helps to maintain your savings habit and provide a financial cushion.

You might also consider transferring your balance to a 0% interest card with a long payoff window (like 36 months), and be sure to check that there’s no balance transfer fee required. If done strategically, you could pay down your balance without sacrificing your 10% savings goal.

Need help tackling debt? Feel free to check out these guides to help you get out of debt fast:

• How to Get Out of Debt Fast (7 practical steps you can start now)
• How To Pay Off Credit Card Debt (Without Feeling Overwhelmed)

If your income is irregular:

If your paycheck depends on commissions, sales, freelancing, or running a business, it’s best to base your savings rate on your average minimum monthly income rather than on your best months or occasional windfalls.

During periods of higher income, increase your savings significantly to make up for leaner months. Because of this unpredictability, you may also need a larger emergency fund. Ideally, save six to twelve months’ worth of expenses to help you manage inconsistent cash flow.

To simplify saving, set a percentage-based savings goal rather than a fixed dollar amount. This way, your savings will naturally adjust according to your income fluctuations.

If you have big expenses coming up:

Whether you’re saving for a wedding or planning a major purchase, it’s important to plan as early as possible. This gives you enough time to reach your savings goal without unnecessary stress.

Start by calculating the total amount needed and dividing it by the number of months until you need to make that expense. This will tell you how much you need to save each month.

If necessary, you can temporarily reduce contributions to other savings goals, but avoid stopping retirement savings altogether. It’s important to carefully consider whether pausing or cutting back on other savings is worth it, since it can delay your long-term wealth-building progress.

To stay on track, automate transfers to a dedicated account specifically for this expense. This helps prevent the money from being used for other purposes.

How to Make Saving Money Easier

Saving money can be tough, especially with the temptation of instant gratification all around us. Here are some simple hacks to help make saving easier and keep you on track toward your financial goals.

Prioritize your savings

Stay accountable by automating your savings with immediate transfers as soon as you receive your paycheck. This should occur before any other spending can take place.

Treat savings as a non-negotiable expense rather than money you save from what is left at the end of the month. This mindset is not only more realistic but also signals to yourself that you are prioritizing savings above other expenses.

Start by funding your highest-priority savings goals first, even when other budget categories might be tight. This approach removes the need for willpower and makes saving automatic and consistent.

Track your spending and plug the leaks

Budgeting often gets a bad rap because it feels like a financial drill sergeant punishing you for small treats like lattes. 

But at I Will Teach You To Be Rich, we take a different approach: enjoy your $3 lattes freely. The real key is asking the big $3,000 and $30,000 questions. If those lattes are causing financial stress, it means something bigger is off in your budget. 

The most effective way to increase savings is by tackling major costs like housing, transportation, and insurance rather than small daily purchases. Periodically review your spending to identify subscriptions, services, or habits that offer little value and cut what you don’t need.

For more in-depth guides on budgeting, feel free to check out these articles: 

• Top Budgeting Apps That ACTUALLY Help You Save Money
• Best Budgeting Template & Spreadsheets (expert picks)

Use multiple savings accounts

The Envelope System divides your salary into cash envelopes for different spending categories. On payday, you allocate money to each envelope. Any leftover cash can go toward paying off debt faster, boosting savings, or treating yourself.

Since most savings happen online now, you can mimic this by using separate savings accounts for different goals. This creates clear progress visuals and helps prevent dipping into one goal for another. Many online banks offer unlimited savings accounts with buckets or naming features to track each goal. Some apps can also help you automate this.

This method turns abstract goals into concrete, measurable targets that keep you motivated in the long run, steadily chipping away at your larger financial goals.

Save windfalls and income boosts

Boost your savings by setting aside a large portion of tax refunds, bonuses, gifts, and other unexpected income before it slips into your regular spending.

When you get a raise or promotion, keep your lifestyle the same and direct the extra income straight into savings. This speeds up your progress toward financial goals without forcing you to cut back on current spending.

The best part about this is you won’t feel deprived because you’re saving money you haven’t yet gotten used to spending. 

Where to Put Your Savings

Once you start building your savings, choosing the right place to keep them can help maximize your returns and make your money work better for you. Here are some options to consider.

High-yield savings accounts

On average, most traditional banks offer just 0.01% interest, but online banks can offer rates closer to 1% or more, making them a smarter choice for growing your savings.

Look for accounts that are FDIC-insured, have no monthly fees, and don’t require a minimum balance. These features help you keep more of your money while it earns steady, low-risk interest.

If you’re not sure where to start, check out my guide to the best online savings accounts for my top picks.

Certificates of deposit (CDs)

CDs typically offer higher interest rates than regular savings accounts in exchange for leaving your money untouched for a set period.

They’re ideal for medium-term goals with a clear timeline, such as a home or car down payment. To maintain flexibility, consider a CD laddering strategy, where you divide your savings into multiple CDs with staggered maturity dates so you can access portions of your money over time while still earning higher returns.

Be sure to align the CD term with when you’ll need the funds to avoid early withdrawal penalties.

Retirement accounts

When building retirement funds, take advantage of products such as traditional and Roth IRAs and your 401(k) to maximize growth through tax benefits. 

Consider both options based on your tax outlook: Traditional IRAs or 401(k)s offer tax-deferred growth, while Roth accounts grow tax-free. If your employer offers a 401(k) match, contribute enough to get the full match—it’s essentially free money and one of the best returns available.

How to Build a Sustainable Savings Habit

Saving money isn’t always easy. It takes consistency, discipline, and patience. But with the right systems in place, you can turn saving into a lasting habit that supports your financial goals without constant effort. 

Make saving a default part of your life

Saving isn’t always easy, but it’s essential to securing your future. Instead of seeing it as a burden, reframe it as your way out of financial stress and a step toward freedom. The key is to start, build momentum, and stay consistent.

Successful savers don’t debate whether to save each month. They automate it. By removing the need for daily decisions, saving becomes a background habit rather than a willpower challenge.

It’s also helpful to celebrate savings milestones to reinforce positive financial habits and maintain motivation for continued progress.

Reevaluate your financial goals once a year

Annual financial reviews help ensure your saving strategy remains aligned with your evolving life circumstances and priorities.

When you hit certain milestones, you can adjust your savings, increase investments, or reallocate spending if needed. The goal is to create a flexible spending pocket that supports your financial commitments.

By having regular financial check-ins, you prevent yourself from sticking to outdated financial plans that no longer reflect your current needs. 

In conclusion, there are no fixed rules for how much you should save—your savings rate should evolve with your personal and financial priorities. No matter what stage of life you're in, make saving a monthly habit, even if it’s a small amount. Consistency builds momentum, helping you move closer to financial freedom and build toward your own version of a Rich Life.