{"id":40128,"date":"2025-05-19T07:26:58","date_gmt":"2025-05-19T11:26:58","guid":{"rendered":"https:\/\/www.iwillteachyoutoberich.com\/?p=40128"},"modified":"2025-05-19T16:22:20","modified_gmt":"2025-05-19T20:22:20","slug":"how-much-should-you-save-per-month","status":"publish","type":"post","link":"https:\/\/www.iwillteachyoutoberich.com\/how-much-should-you-save-per-month\/","title":{"rendered":"How Much Should I Save Every Month (according to your goals)"},"content":{"rendered":"\t\t
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Savings are essential to your money goals<\/a>. There\u2019s no hard and fast rule about how much you should save per month<\/span>, <\/span>however\u2014<\/span>it depends on the goal itself and your individual financial situation.<\/span> That means, though, that there is a way to work out the best monthly amount for <\/span>you<\/span><\/i> to put aside. This involves getting real about your money situation but without the need to shame yourself into living like a Spartan if you can’t quite afford your big-ticket items yet.<\/span>\u00a0<\/span><\/p>

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How do you know how much you should save per month?\u00a0<\/strong><\/h2>

Saving money is hard. There, I said it.\u00a0<\/span><\/p>

It\u2019s not easy to put money away for some future version of yourself, especially as we live in a culture of convenience. When was the last time you waited for the potatoes to grow before enjoying your plate of fries?\u00a0<\/span><\/p>

But here\u2019s the thing. Saving allows you to build pockets of financial freedom. For example, you can save for a <\/span>comfortable retirement<\/strong><\/span><\/a> or a\u00a0 big event such as a special birthday or a wedding<\/a><\/strong>. And because there are so many different things to save for, saving won’t look the same for everyone.\u00a0<\/span><\/p>

So how do you decide on the amount? Financial pundits recommend saving 10% of your income per month, but there\u2019s no real reason for choosing this percentage other than it\u2019s easy to account for.<\/span><\/p>

What makes much more sense is knowing which savings goals you have. Then, you can save appropriate amounts for short-, medium-, and long-term goals. I spoke about <\/span>why not knowing your money goals can lead to you having the worst financial goal in this Men’s Health article<\/i><\/strong><\/a>.<\/strong> Have a look\u2014and take note.<\/span><\/p>

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Long-term goals include retirement and education savings which usually take more than 10 years to save for.\u00a0 Medium-term savings can include saving for your <\/span>dream home\u2019s<\/a><\/strong> down payment and usually take 2 to 10 years.<\/span><\/p>

Short-term savings might be saving up for new tech, <\/span>a wedding<\/a><\/strong>, and other large-ticket items. Typically, they don\u2019t take longer than a year to save up for. <\/span><\/p>

Long term or retirement savings<\/strong><\/h2>

If you want to have $2 million at retirement and you\u2019re only starting to save for it at the age of 35, $100 a month isn\u2019t going to cut it. Use a retirement calculator to work out your minimum monthly contribution, and use products such as traditional and <\/span>Roth IRAs<\/a><\/strong> and your <\/span>401(k)<\/a><\/strong> to your advantage.<\/span><\/p>

It\u2019s also worth knowing how much you need to save to maintain your current lifestyle once you down tools and get the proverbial golden handshake.\u00a0<\/span><\/p>

Medium or short term savings<\/strong><\/h2>

Medium or short-term savings are for items or events that you need some time to save up for, but it\u2019s different from your <\/span>retirement money<\/strong><\/span><\/a>. The goal with medium and short-term savings is that you\u2019re actually saving money to spend on something specific.<\/span><\/p>

Emergency savings<\/strong><\/h2>

Don\u2019t forget about <\/span>emergency savings<\/a><\/strong>. While some may advise a nest egg of at least 3 to 6 months, I personally <\/span>push my savings to 12 months\u2019 worth of income in cash. That takes the edge off instances such as global pandemics, total market crashes, or even a <\/span>job loss<\/a><\/strong>.\u00a0<\/span><\/p>

So, to get back to the question of how much you should save per month, start with what you can afford and work your way up. It doesn\u2019t make sense to save 20% if you can hardly pay your bills and you\u2019re placing your credit score under pressure.<\/span><\/p>

As you <\/span>pay off debt<\/strong><\/span><\/a> and free up expenses, you can increase your savings and investment contributions. If you only spend 40% of your income on payments, it makes sense to put away a little extra.\u00a0<\/span><\/p>

In my book, <\/span>I Will Teach You To Be Rich<\/a><\/strong><\/em>,<\/em> I recommend the <\/span>50\/30\/20 rule<\/strong><\/span><\/a>. While this might be a little different than what you\u2019re used to, it\u2019s designed to set you up right for your <\/span>Rich Life<\/a>.<\/strong><\/p>

Here\u2019s how it works: fixed costs are around the 50% mark of your gross salary, savings and investments are in the 30% slot, and to make life a little more fun, allocate 20% of your earnings to guilt-free spending.\u00a0<\/span><\/p>

You can adjust these figures as you meet certain goals and increase your investments or spending as your payments decrease. But the idea is to build yourself a spending pocket that won\u2019t infringe on your financial goals and obligations.<\/span><\/p>

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We have to talk about debt<\/strong>\u00a0<\/span><\/h2>

Now, your savings percentage might also <\/span>depend on your debt<\/a><\/strong>. If you have a <\/span>credit card<\/a><\/strong> with a high balance and a high-interest rate, it might not make sense to spend 20% on savings.<\/span><\/p>

You\u2019ll have to compare the interest you\u2019re paying on your debt and the interest you\u2019re getting on your savings to determine whether more money should go into paying off debt first. Let me explain.\u00a0<\/span><\/p>

Credit card interest can start from 12.5% APR and go all the way to 25% and upwards, depending on your card. Now, you\u2019re going to find it almost impossible to find a savings account that pays that minimum of 12.5%. On average, savings accounts pay around 0.01% at the bigger banks and can go up to 1% with an online bank.\u00a0<\/span><\/p>

If you have a credit card with a balance of $10,000 at a rate of 12.5%, it will take you 36 months to pay it off with a monthly installment of $335. The total interest paid will be $2,040.<\/span><\/p>

Bump that up by $100 and increase the installment to $435, and you\u2019ll pay the card off in 27 months. The total interest paid is $1,491 which means you save $549.\u00a0<\/span><\/p>

Now, if you decide to stick that $100 in a savings account instead every month for the next 27 months at an interest rate of (best case) 1%, you\u2019ll earn a whopping $31.73.\u00a0<\/span><\/p>

One way to make this a little easier on your pocket is to move the credit card balance to a 0% interest card, and look for a long pay-off period such as 36 months.\u00a0<\/span><\/p>

You also want to make sure there\u2019s no balance transfer fee. Then, pay off your credit balance within those 36 months. This might not affect the 10% minimum that goes to savings.\u00a0<\/span><\/p>

If this isn\u2019t possible, you still want to pay off that balance as quickly as possible. You might find going 5% extra on debt repayments and 5% on savings might work. Just find the ratio that allows you to get out of the red fastest while building up a financial safety net.\u00a0<\/span><\/p>

Check out my blog post<\/a>\u00a0to learn my top 3 rules for choosing a credit card that\u2019s right for you.\u00a0<\/strong><\/span><\/p>

Strategies for saving\u00a0<\/strong><\/h2>

Conscious spending\u00a0<\/strong><\/h3>

Budgeting gets a bad rap and for good reason. It conjures up a financial drill sergeant that whips you across the knuckles every time you order a latte. But at <\/span>I Will Teach You To Be Rich<\/a><\/strong>, we have a different approach. I want you to have those $3 lattes and have as many as you like.\u00a0<\/span><\/p>

But here\u2019s the thing. <\/span><\/p>

You need to start asking those $3,000 and $30,000 questions in order to make this stick. What do I mean by that?\u00a0<\/span><\/p>

If those $3 lattes are putting you under financial pressure, it means that something big is misaligned in your budget. Start asking questions about your big-ticket items.\u00a0<\/span><\/p>

The big-ticket items that form part of your living expenses such as:\u00a0<\/span><\/p>