How Much Should You Save Monthly?

You need to save money for your future, for a rainy day, for retirement, and so on. You know that you do, but you do not do it. Or maybe you do save but you are not sure it's enough. Not knowing how much to save is actually pretty common. The trouble is that there is no one-size-fits-all amount because everyone is different. There are ways to figure out how much you personally need to save, though. If you are ready to dig in and figure it out, we have you covered. Let’s dive in.

Ways To Decide On an Amount To Save

There are two basic ways to decide what you need to save monthly: by percentage and by a set number.

Some people save monthly by following the ever-popular 50/30/20 rule:

This means that 50 percent of your income goes to pay for utilities, rent, and necessities;
30 percent of your income goes to another spending;
The last 20 percent goes to saving.

On paper, this looks great, and if your income allows it, go for it. However, if saving 20 percent of your income is going to hurt you in some way or have you doing without, you should try setting a certain amount you want to save each month. The rest of this article is dedicated to that.

Another great way to determine how much to save monthly is by choosing a set amount. This can be a bit difficult for some as the amount you want to save may surpass the amount you have to save. However, it can be great, too, as it can be a motivation to push yourself harder.

So how do you decide what amount to save monthly? It is not that hard. Just answer the following questions:

1. What Are Your Goals?

What exactly do you want to save money for? Start by listing these goals: short term, medium term, and long term. List them all.

Some common goals are to:

Start a business
Send your kids or grandkids to college
Get out of debt
Buy a house or pay off your home
Buy a new car
Go on vacation
Travel around the world
Retire at a certain age
Sock money away for loved ones in the event of a tragedy
Return to school
Take a year off to work on something else- or just to have a year off (Who wouldn’t enjoy that?)

The potential goals are endless and are completely up to you. No matter what they are, though, you need to put them on a list so you can start making plans for them.

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2. How Much Will They Cost?

After you have your goals on paper, you need to figure out how much they will cost. Obviously, you are not a fortune teller, so you probably will not know the exact amount. You will be able to figure out the cost of short-term goals much easier than long-term ones.

For instance, if you want to purchase a new smart TV over the next year or two, you can determine an amount according to the current prices. However, if you are looking to retire in 30 years, we all know that prices will change by then, so having an exact amount on this will not be possible.

You can use estimates for this, but let me give you some advice here: Aim to overestimate.

It was not that long ago that the rule of thumb was to have a million dollars put away for retirement. Recently, experts are saying that it will not be enough. And, let’s be real, costs will definitely increase.

So when it comes to your medium and long-term goals, try to overestimate. If it turns out you do not need the amount you saved, yay! You have some extra cash. That’s much better than not having enough.

Another important thing to remember is that you do not necessarily need to save that amount of money. You can invest your money and let it grow over time, so you can factor the growth in. Bottom line: You need to have some basic idea of the amount you need for each goal - preferably adding a little padding in.

3. When Do You Want to Reach Them?

You also need a goal date. These are your goals, so you can always change the dates later. For now, set a date. Then, calculate the number of months you have between now and that date.

4. Calculate the Monthly Amount

Last, you simply need to turn all of this information into a monthly amount. Divide the total of the goal by the number of months and voila! You have the amount you need to save monthly. Here are a couple of examples:

These are just two goals. Most people have many more, but we will keep it simple. Now, you add the monthly totals from each goal together. In this case, I would need to save a total of $373 per month. Depending on how often you get paid, you can break this down into weekly totals or a total for every two weeks.

Breaking it down as far as you can make the totals seem more manageable. If the total you are looking at is too high, check out the next section for help.

How Can I Save Monthly When There’s Nothing Left?

I cannot tell you how many times I have wanted to save money but when it comes time to do it, there is nothing to save. So if you are currently wondering “How can I save money? I can barely pay my bills”, don’t fret. It is a common problem, but it is not an impossible one to solve. Work your way down the following list- you should find some cash to save somewhere here.

Dig Into Your Spending

Nearly everyone I know finds at least a spare $10 a month when they dig into their spending, but often it is more than that. It is not necessarily that anyone is intentionally burning cash. It is usually due to a lack of attention or even a lack of knowing how to save. Let’s start with a few tips:

Food

When it is time to save money, food is one of the biggest categories to start with. So if you really want to save monthly, start by digging into your food spending. It likely breaks down into three categories: eating out, groceries, and impulse snacks. Try these tips for each category:

1. Eating Out

The best way to save on eating out is to not do it, but that is not always possible. And, let’s be honest: Sometimes nothing beats take out pizza or a juicy fast food burger and fries.

Instead of writing out take out completely, let’s just find ways other ways to save in this area.

First of all, limit the number of times you eat out each month. If Friday is fun family night, keep Friday as the one day each week you get take out. Or try making homemade pizza two of those family nights each month.
Use coupons and dollar menus. You really do not need the $8 “value” meal every time you eat out - I promise. Even just eating one of those a week adds up to almost $40 a month - that is a good chunk you could save monthly. And remember to look at your receipts. Many restaurants add a survey code to their receipts. If you go in and take that survey, you get either a discount or a free food item.
Prevent last minute drive thru trips by making a weekly menu and following it. Add in things like crockpot meals so that you can put them on in the mornings and they will be ready to eat when you get home.
Little steps like this are very helpful when you get off late or soccer practice runs over and you are too tired and hungry to cook. When you make your menu, be sure to consider what you have going on that week so that you can plan your crockpot meals on your busiest days. If you do not think it will make a difference, just give it a shot for a month or two.

2. Groceries

Buying groceries is much cheaper than buying fast food, so by switching over to eating at home at least most of the month, you can definitely save monthly. Still, if you are not careful, you can spend a lot more on groceries than you actually need to. Start with these grocery-buying tips:

Always, always, always carry a list. Doing so helps you stay on track and avoid unnecessary purchases. Many people who switched to using a list reported saving hundreds each month.

Make sure your list revolves around your menu. This may sound silly, but some people actually make a menu and do not buy what they need for their menu items. They end up back at the grocery store later for things they actually need or back in the drive-thru.

Use coupons or coupon apps, such as Ibotta and Flipp. Both can help you save a ton of money- I know from experience.

Check out Amazon. Amazon has a lot of food items you can have shipped to you. In order for this to save you money, though, you need to know how much the items cost at your local grocery store first. Sometimes you can save on Amazon and in others you might pay triple the price. It all comes down to comparison shopping.

Carry cash. After you have made your grocery budget, go to the ATM, make a withdrawal, and put the amount you have for groceries into an envelope. Leave the rest of your cash at home along with any debit or credit cards. This keeps you limited to the amount of money you have in that envelope, so you should make much wiser decisions that you would at other times.

3. Impulse Snacks

I am almost willing to bet that if you really took a look at your spending, you would find that you spend a lot more on things you did not plan to buy than you think. Using the cash and envelope system can work wonders for avoiding or at least minimizing impulse buys.

Clothing

Most people have no reason to buy clothing every single month, though some jobs can tear your clothes to pieces and you have no choice. For most people, though, clothes shopping is a sporadic thing. You can easily cut back on your clothing budget simply by shopping online at discount stores, hitting yard sales, and shopping at thrift stores.

Gas

Do you really need to spend the amount on gas that you do? The answer may be “Yes” depending on your job and kids’ activities, but it never hurts to take a look. Is there a way to cut back on gas? Could you or your kids carpool to anything? Could you get all of your errands done in one day?

If you are still paying your bills in cash, try paying online instead.
Shop around for gas prices.
Fill up your tank when you can instead of having to stop constantly.
Sign up for rewards programs through gas stations - I did this and ended up getting 30 gallons for almost a dollar off per gallon by saving up my rewards points for a while.

Just take a look and see if you can cut down any on your gas usage or earn free or discounted gas in some way.

Dig Into Your Bills

The next step you should take to save monthly is to lower monthly bills, which is extremely effective. Before we dig into how to do that, though, you need to remember that once you lower them, you need to save the money - not add to your bills. If you spend everything you save on your bills, you still will not have anything to save monthly. Remember your goal here so you can make actual progress.

Okay, now let’s get into it.

Utilities

There is not a lot you can do about needing electricity, water, and gas for your home unless you do not mind doing without them. For everyone else, they are a necessity, so we cannot necessarily get rid of them, but we can cut the bills down.

1. Sign Up For Budget Billing

Budget billing is a way to regulate the amount you pay every month. For instance, instead of paying extremely high heating and cooling bills in the summer and winter, you pay an average amount all year. Yes, this means you pay more than what you actually use sometimes, but it also means you pay for less than what you use at other times. Trust me, it works out.

2. Decrease Your Usage

You can search for ways to save monthly on utilities and find more tips than you could have ever imagined. So, I will not say much here except that you should be mindful of your usage.

Be sure you turn off lights and other items that use electricity when they are not in use.
Trade out old light bulbs for energy saving ones.
Adding window film to your windows can decrease your heating and cooling costs.
Try not to take hour long showers.

3. Phone, Cable, Internet, and Others

Take a look at your cable, Internet, phone bills, and all your other monthly bills that are not necessary utilities. Do you really need them? Most people do not use cable anymore yet many people still pay for it. Consider cutting it. With all of these bills, call your providers and negotiate lower rates. When companies think you are shopping around, they will typically do what they can to keep your business.

4. Insurance

Insurance - especially auto insurance - can be ridiculously expensive. Any time your policy is getting close to ending, call around for new rates.

Also, you should know that your credit score can actually affect your insurance rates, so improving your credit score can help you save monthly on insurance premiums.

Dig Into Debts

If you are paying on debts every month, consider a personal installment loan to consolidate all your debt into one monthly payment.

Dig Into Rent or Mortgage

Rent and mortgage payments are usually the highest household bill.

If you rent and pay a high monthly payment, consider moving when your lease is up. By looking around for a new place, you might be able to save $100 or more per month.
If you are buying and your mortgage is high, consider refinancing your mortgage for one with a lower interest rate. You never know what you might be able to save by doing so.

Dig Into Your Goals

Take a look at your goals again. Do you really want them? I know it might sound crazy, but some people put goals down on a list because they “should” or because it just sounds like fun. I’m not saying that you have to let those goals go. I am just saying take a look and make sure that YOU actually want them. There is no reason to put pressure on yourself for something that you really do not care about.

Dig Into Your Income

Last, consider your income. If you simply are not making enough money to save monthly no matter how you slice it, you will need to consider ways to increase your income. Here are just a few ideas:

Ask for a raise
Apply for a better job
Pick up a second, part-time job
Start a side hustle
Sell your unwanted items

You can try a mix of different constant and one-time ways to make a little extra to fund your goal to save monthly.

Conclusion

Yes, the saving will require some work, some dedication, and maybe a little sacrificing. In the end, though, when you have reached your goal thanks to all of your hard work, it will all be worth it.

How Much Should You Save Monthly?

Ways To Decide On an Amount To Save

By Percentage

By Set Amount