How Much Should I Save Each Month? 50/30/20 Rule Is a Good Way to Think

How much money should I save each month? I’ve heard this question severally, and I strongly believe it is one of those questions you can never answer correctly until you know the person asking the question better. 

Yes, I normally ask people many questions before trying to answer the question of what I feel they should save each month. I do this because I know that there are several factors that can determine individuals’ financial habits. 

The desire to save is never enough – people will struggle to commit to substantial saving if they do not address important factors like their habits and aspirations. You will need to understand your financial goals before you can consider yourself ready to save how much you should be saving. 

Defining your savings goals 

One of the most important things you must do before deciding to be putting away a specific amount of money every month or a certain percentage of your monthly income is to define your saving goals. What are your short-term and long-term reasons for saving? 

To determine your saving goals and figure out how much you need to save every month, you should consider the following three timelines:

Less than one year

Some people like to take at least one vacation in a calendar year. If this is you, then your short-term saving goal may be to afford the best possible vacation package in a particular destination. You may also need to save up to fix your car within the year, pay your tax, or buy gifts for the holiday. 

You need to figure out what you really need to do in less than one year and how much you will likely spend to get it done. Factor this into your monthly savings. 

Less than one decade 

In the next ten years, you should expect to complete a few projects that will require substantial investments. It is important that you think of the things you really need to achieve in the next decade and the financial requirements. 

You may need to make a down payment on a home. You may need to buy a new car. You should also save up for emergencies. Some of the expenses you will make are not so predictable. For example, you may need to cover a major insurance deductible. When you are in between jobs, you should have a reasonable saving that can keep you afloat. 


A lot of things can happen in your lifetime, and you may need to fall back to your savings to handle some situations. When you finally retire, your savings and investments should be enough to give you the kind of life you deserve. 

Retirement is regarded as the ultimate long-term saving goal. You need to be clear about what you want after retirement. We will get back to this soon. 

How Much To Save Every Month 

As stated earlier, how much you will need to save every month will depend on several factors, including how much you earn and what you are saving for. I am not really interested in how much you earn, but I want to perfectly understand what you are saving for. 

You need a perfect understanding of what you are saving for. You also need to understand how much and how long you will need to save to achieve your savings goals. To make it comprehensive, we will break down your savings needs into three parts. 


No one prays for emergencies, but they often happen when we least expect them. That is exactly why they are called emergencies, and you need to be financially ready to handle them. You should establish an “emergency fund” fund that can cover 3 – 9 months of your living expense. 

To determine how much to put away to your emergency fund, calculate your monthly cost of living. Remove everything that you consider luxuries, which you can forfeit if you lose your work. After your calculation, divide the figure by two and see if you can save that amount monthly. If you save that amount monthly, you will be able to save a six-month emergency fund in a year. 


As stated earlier, retirement is the ultimate long-term reason to save some money in your active years. You should be consistent in building up your retirement package. If you can, commit to saving between 10 and 15% of your monthly income for retirement. 

Most companies help their employees to save towards retirement. If you have such benefits in your workplace, ascertain the percentage of your earnings that go into retirement and try to match it up to 10 – 15%. If, for instance, your employer saves 5% of your earning for retirement, you will need to save 5 or 10% more to reach the recommended 10 – 15%. 

Other Things 

You can save towards several other things you know you really need. The best way to make sure you have enough money to handle every other thing that requires finances is to make a list of major expenses you need to make within the next decade. 

Be realistic as you assign monetary values to the things you need to do. Calculate everything and divide by the number of months you need to build the fund. If you have nine years to do that, you will have to divide everything by 108 months. The value you get is what you should aim to save every month. 

The 50/30/20 Rule 

Have you heard about the 50/30/20 rule? This rule suggests that you spend 50% of your earnings on necessities, 30% on discretionary items, and 20% should go into your savings. This is the simplest way to figure out what you can realistically save from what you earn. 

Saving saves you on rainy days. It will also help you pay for the things you need to make your life more meaningful during your active years and later in life when you retire. But how much should you save every month? We've suggested how you can determine how to figure out on your own how much you can realistically save. I sincerely hope that this piece helps you save more and manage your money better. 

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