How Much Should You Save Each Month?

Your money is yours to do with as you please, but backup cash can make certain situations much easier to navigate.

For instance:

• When an Emergency Hits
  Financial protection against unexpected expenses often begins with saving. Even a goal of $1,000 in an emergency fund is a great place to start.² Over time, you might want to build that up to three to six months’ worth of essential expenses.³
• When It’s Time to Retire
  The earlier you start putting money in a retirement fund, such as an Individual Retirement Account (IRA), the more time it has to grow. Once you open one, experts generally recommend contributing around 10-15% of your gross income every month.⁴ Ideally, the amount you save over time, along with Social Security, can help replace 70-90% of your pre-retirement income, helping you relax when it matters most.⁵
• When Making a Big Purchase
  If home or car ownership is a goal, a larger down payment usually helps lower your overall loan costs. A down payment of 20% or more can help you save the most, but even saving 5-10% of the total purchase price can still make borrowing considerably cheaper.⁶

You might be wondering what percentage of your paycheck you should save each month, especially if you’re earning less than you’d like. Even if you make too little to set much aside, personal finance experts who prioritize intentional spending over strict frugality may encourage you to see saving as a skill you can build with practice, not an out-of-reach goal. It’s not about immediately hitting a number tied to your salary—it’s about starting.

Here’s how you can take the first steps:

• Starting Small
  You can send $20 to a savings account every month, then ramp up to $20 a week.
• Setting a Percentage
  You may test setting aside 15-20% of your monthly earnings and see how it feels.
• Trying a New Budgeting Method
  You may like a 50/30/20 budget approach, where you put 50% of your take-home pay to necessities, 30% to wants, and 20% to savings and debt repayment.

The main goal of saving is to find what realistically works for you, but if you need concrete numbers to get started, there are guidelines for income levels ranging from $56,600 to 169,800.⁷

• Income Levels Below $56,600
  To build a starter emergency fund and develop a savings habit, you can aim to put away 5-10% of your monthly earnings.⁸
• Income levels between $56,600-169,800
  To balance emergencies, retirement, and future large purchases, you can try putting away 15-20% of your monthly earnings.⁹
• Income levels over $169,800
  You might consider maximizing tax advantages and accelerating long-term wealth building by saving more than 20% of your monthly income.¹⁰

If saving the recommended amount for your income feels overwhelming right now, you can always start below the suggested target and build up to it.

Financial stability is a fluid term. For you, it might mean the promise of a comfortable retirement. For someone else, it may be the ability to eat out every week. Either way, reaching financial stability usually requires putting money away consistently.

Here are a few ways you can build that habit:

• Automate Your Savings
  You can set up automatic transfers, so that every payday, you move money from your checking account to your savings account like clockwork. This is often referred to as paying yourself first: treating your savings as a non-negotiable expense, like rent or the mortgage.
• Track Your Spending
  Using a budgeting app, spreadsheet, or creating a monthly budget can help you track spending and pinpoint where you can cut back, like subscriptions you rarely use.
• Saving Financial Windfalls
  Windfalls are unexpected financial gains, such as a larger-than-expected tax refund, a bonus, or a cash gift you didn’t see coming. You could funnel all or part of that windfall right into your savings account.
• Rounding Up
  Some banking apps automatically round your debit card transactions up to the next dollar and invest the spare change.