How Much Money Should I Save Each Month?

September 25, 2019

Figuring out how much of your income to save each month is as intimate a decision and striking the right balance is an important move that could set up your future decades from now.

According to an article by CNBC, the average American savings account for adults without children, aged thirty-four and younger, holds just $2,729. This same article expands on how even experts debate how much should be saved in personal savings accounts. Generally, however, experts agree savings accounts should have enough to cover times of emergency (months of unemployment) as well as longer and shorter goals outside moments of crisis.

The path to having a fortified and sustainable amount of savings is accessible to anyone provided they have the right tools to personalize their goals based upon their existing habits and aspirations.

Become a goal-oriented saver

One of the best ways to improve how your money is working for you is to make a plan of long and short-term goals. Would you like to start saving for retirement? Are you hoping to expand your family? Are you planning on taking any vacations in the future? Knowing where you’d like your money to go is an important deciding factor that might change how you spend your money today, tomorrow, or even ten years from now.

Give your money a proper home

Identifying your savings goals could illuminate where best to save this money considering your goals. Perhaps it might be a good decision for you to diversify where your monthly savings are stored based on these goals? Discover suggests, “budgeting with multiples savings accounts can set you up to realistically save money for whatever you desire.”

Should you invest your retirement savings? Are you putting all your spare coins together to save for laundry? Or are you saving for a more immediate, more expensive goal? Regardless of your goal, be sure to give it the right home so that your money can passively accrue interest if that is an option.

Where do I begin?

Your savings goals are dependent upon your income, recurring bills, and expenses, as well as your vision for your ideal future. In order to make a plan, consider revisiting past bank statements and bills, and use those details to inform your upcoming decisions.

We recommend opening a spreadsheet or taking a pen and paper to chart the exact amounts of income and payments you make each month to paint a clear picture of where your money is going.

Here are places to begin your research:

  • Know the cost of your recurring expenses

Over the course of the month, you are likely to pay for rent or mortgage, utility bills, subscription services, loans, and/or food. Looking through your statements, create categories for where your money goes and average the amount you pay for each, then create a figure for what you’re willing to spend for that category.

Be sure to be reasonable with this budget and consider what you need versus what you would like to spend. What is feasible isn’t always what is necessary. Having plenty of money to spend on housing doesn’t mean this is the most prudent decision.

  • Know the cost of your wants

After your recurring bills, what do you do with the money that’s left? How do you spend money to have fun? How is your money allocated to occurrences that don’t involve your immediate wellbeing?

Just like your recurring expenses, chart this amount, and take notes.

  • Analyze this data

The information you learn about how you spend your money can be a temperature check for changes you’d like to make. Could you turn your thermostat down to save on gas? Are you eating out most of the week? Do you pay for subscription services with similar or identical offerings?

Combing through your statements could show you small changes that might leave you with more money to add to your savings account(s).

If charting these expenses becomes too cumbersome, don’t be afraid to utilize a tool. Nowadays, there is an abundance of free budgeting tools to expedite the process of line by line personal accounting.

So, how much should I save each month?

Considering your analysis of where your income goes, you can determine your monthly savings in one of two ways:

  1. On what’s left after you’ve paid your recurring expenses and wants.


  1. You can set a percentage of your total income you’d like to save monthly and rework your monthly budget based around your savings goals.

The decision of which to choose could be dependent upon the urgency in reaching your goals. Let’s say you have a destination wedding that you cannot miss, perhaps you’ll be allocating more of your savings here? Or maybe, you’re saving for a retirement RV so that you can visit every state park later in life? And for this reason, you’ll be putting a smaller amount of money in an account for a longer period of time.

It’s important to stay flexible while also prioritizing savings goals, such as an emergency fund, that could save you from joining the 40% of American adults, as reported by The Federal Reserve, who say they couldn’t afford an unexpected $400 expense without “borrowing or selling something”.

Different goals will require different savings tactics. At the center of these goals is your needs, so be sure to prioritize yourself as you continue saving monthly for your future.

Explore our blog for more answers concerning your personal finances, loans, and tips to make your money work for you.

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