How Much Money Do I Need to Save Every Month?

By — Published September 26, 2017

How Much Money Do I Need to Save Every Month?

When it comes to deciding on a particular amount of money that you should save every month, there is no exact figure that can be regarded as the most suitable. Every individual has a different set of financial requirements, earnings, expenditures and goals. There are a number of factors including your financial status, number of dependants, financial responsibilities, liabilities and so on that typically influence your ability to save a portion of your income every month. That being said, there is no set dollar amount of savings that works for everyone.

So, how do you save money?

The most effective strategy towards ensuring that you keep aside an adequate lump sum that would serve as an emergency fund in times of crisis is starting with saving at least 10% of your monthly income. It is a fairly feasible strategy that can be adhered to without having to make any drastic cuts on your regular expenses. Once you have become adept at managing your finances well, you can go on to save as much as 20 or 30% of your monthly income and plan for your future goals. In addition to this, you must focus on not only saving money for your retirement but also for an emergency fund that you can use in times of unforeseen financial crises such as medical emergencies, unplanned vacations, loss of employment and basically any unexpected contingencies that cannot be covered merely with your monthly income.

How much money an average person in the US saves?

According to a survey conducted by GOBankingRates in 2016, a staggering 69% of the Americans have less than $1000 saved in their bank accounts. What’s even more surprising is that a whopping 34% of the people in the US do not have any savings at all! A majority of the financial experts and advisors typically recommend that an individual must have somewhere around three to six months worth of living expenses saved in their bank accounts at any given time to cover for any unexpected financial emergencies. Apart from your rainy day fund, you must also save money for any other short term or long term financial goals such as buying a home, planning an international vacation, renovating your kitchen and so on. Having multiple savings targeted towards specific goals will not only help you in managing your finances better, but also encourage you to strictly adhere to your savings schedule regardless of any additional expenses that might come your way.

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