How Much Should I Save Each Month? A Simple Practice For Financial Wellness

By Melissa Cook Reviewed by Nima Vahdat Updated Sep 22, 2023
How Much Should I Save Each Month? A Simple Practice For Financial Wellness

If you ever find yourself wondering, “How much should I save each month?” We have the answer!

A fundamental principle of personal finance is the practice of allocating a portion of your income to savings. Yet, calculating the optimal monthly savings amount can pose a challenge. 

According to recent research, almost half (48 percent) of Americans have no idea how much they should be saving!


  • The 50/30/20 Rule – This widely recognized budgeting rule suggests allocating 50% of your after-tax income to needs, 30% to wants, and 20% to savings and debt repayment.
  • Realistic Saving – Your savings target should be realistic and tailored to your financial situation. Setting achievable goals is crucial for long-term success.
  • Debt Relief Solutions – If high-interest debts are limiting your ability to save, consider debt relief options like debt settlement and debt consolidation to regain financial control.

The specific sum you should save each month hinges on your individual objectives. Common savings goals include saving for college, accumulating funds for a home or vehicle down payment, or budgeting for a planned vacation.

Below, we’ll tackle one of the fundamental questions on the path to financial security: “How much should I save each month?” 

Whether you’re aiming to build an emergency fund, save for retirement, or manage your debt effectively, understanding how to allocate your income wisely is key.

Why the 50/30/20 Budget Is Good for Many People

Despite the obvious importance of maintaining savings, a study conducted by Ramsey Solutions revealed a clear shortfall in personal savings among millions of Americans.

According to the survey, 36 percent of all Americans have absolutely no savings at all, and another 19 percent have less than $1,000 saved. Only 45 percent of all Americans have $1,000 or more in savings.

Not having savings can put you at serious risk of financial disaster, so it’s vital to prioritize putting some money in the bank.

There are several rules of thumb that relate to savings, but the 50/30/20 budget rule serves as a practical starting point for many individuals.

It promotes financial balance by dividing your income into three categories:

  • Needs (50%) – These are essential expenses like rent/mortgage payments, insurance premiums, utilities, groceries, car payments, and childcare.
  • Wants (30%) – This category covers discretionary spending, including dining out, entertainment, hobbies, personal care, and non-essential purchases.
  • Savings and Debt (20%) – Allocate 20% of your income to savings, which includes emergency funds, retirement accounts, and debt payments.

Let’s look at how that breaks down for someone (or a family) with a monthly after-tax income of $6,000.

  • Needs – $3,000 (50% of income)
  • Wants – $1,800 (30% of income)
  • Savings and debt repayment – $1,200 (20% of income)

While the 50/30/20 method won’t work for everyone, it helps ensure you prioritize both your immediate financial needs and long-term financial goals, including debt relief and savings.

Determine What’s Realistic for You

While the 50/30/20 rule provides a useful framework, your financial situation and goals are unique. 

To determine a realistic savings amount each month, consider the following:

  • Your Income – Your savings plan should align with your income. Calculate a percentage that allows you to save without sacrificing essential needs.
  • Financial Goals – Identify your short-, mid-, and long-term financial goals, such as paying down debt, building an emergency fund, or saving for retirement. Your savings should support these objectives.
  • Expenses – Many Americans would be reluctant to admit they don’t know how much they spent last month. But it’s true – they simply have no idea! That’s why it’s important to carefully evaluate your expenses to identify areas where you can cut back and allocate more toward savings or debt relief.

Start Small and Work Your Way Up

If saving a substantial amount each month feels overwhelming, remember that it’s perfectly acceptable to start small. 

Begin with a manageable percentage of your income, even if it’s just a few percentage points. As your financial situation improves, gradually increase your savings rate.

The key is consistency. Automate your savings contributions to ensure you consistently set aside money each month, whether it’s for debt relief or building a financial safety net.

Where to Put Your Savings Each Month

When determining where to put your savings each month, consider these options:

  • Emergency Fund – Prioritize building a three- to six-month emergency fund to cover unforeseen costs, such as medical bills or car repairs. This financial cushion ensures you’re well-prepared to handle unexpected setbacks, alleviates financial anxiety, and reduces the need to resort to high-interest debt during emergencies.
  • Retirement Accounts – Contribute to retirement accounts like a 401(k) or IRA to secure your financial future. If you have retirement savings and your employer matches a specific percentage of your salary, your initial goal should be to save at least that matching amount.
  • High-Yield Savings Account – This account is designed to provide a superior interest rate or annual percentage yield (APY) compared to the average savings account, enabling your money to grow more rapidly. You can typically find these accounts at online banks, often free of charge.
  • Money Market Account – Much like high-yield savings accounts, money market accounts offer a secure means to park your funds while earning interest. They come with added benefits such as debit cards and check-writing capabilities, enhancing accessibility to your funds.
  • Certificate of Deposit (CD) – A certificate of deposit account guarantees a fixed interest rate, typically higher than the rates offered by the accounts mentioned above. In exchange for this fixed interest, you commit to keeping your funds in the account for a predetermined period, ranging from a few months to several years. Early withdrawals from CDs usually incur penalties, making them better suited for funds you won’t need to access in the near term.
  • Investments – Explore investment opportunities to potentially grow your savings over time.

Ways to Boost Your Savings

To accelerate your savings, consider these strategies:

  • Reduce Unnecessary Expenses – Review your discretionary spending and identify areas where you can cut back. For example, could you reduce your entertainment spending, subscriptions, housing costs, grocery bills, or car payments?
  • Increase Your Income – You can save more money if you’re earning more. Look for opportunities to boost your income through side gigs or career advancement.
  • Automate Your Savings – Relying on discipline or willpower to improve your finances doesn’t always work. You can have your employer transfer retirement savings directly from your paycheck. This way, you won’t ever have to see the money in your account.
  • Prioritize Debt Repayment – High levels of debt can erode your income and hinder your capacity to save. Concentrate on settling high-interest debts initially. Afterward, redirect the funds you were using for debt payments toward your savings.
  • Pursue A Salary Increase – Securing a raise is a swift method to boost your savings, provided you allocate the extra income toward savings and sidestep the allure of expanding your lifestyle unnecessarily.
  • Windfalls – Allocate unexpected windfalls, like tax refunds or bonuses, directly to your savings or debt relief efforts.

Conclusion About How Much Should I Save Each Month

Determining how much to save each month is a crucial step toward financial well-being. 

While the 50/30/20 rule provides a solid foundation, customization based on your unique circumstances is essential. 

At Americor, we understand the importance of managing your finances wisely. 

If high-interest debts are impacting your savings and financial well-being, explore our debt relief solutions, including debt settlement and debt consolidation, to regain control of your financial future.

If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider negotiating a debt settlement and an affordable payment plan that suits your budget.

Talk to one of our certified Debt Consultants, for free, who can provide personalized advice tailored to your specific needs.

By taking proactive steps, you can put an end to your financial stress and work towards a brighter financial future. Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.

For more information on Americor’s debt relief services, contact us today to see how we can help you pay off your debts, and get on the fast-track to becoming completely debt-free!



Melissa Cook

Melissa has a degree in English and marketing from University of California Irvine. She is a creative and accomplished content writer and editor with comprehensive experience developing rich, compelling content for a variety of websites. With her expertise in writing a broad range of content, combined with outstanding interpersonal skills and commitment to exploring innovative ideas, Melissa has done an excellent job developing content for blogs, articles, social media, and the company website. When she is not writing, Melissa spends most of her time cooking, traveling the world, and catching her favorite Broadway shows.