How Much Should You Save Each Month?

The big question just about every American is asking right now is how much they should be saving from their income each month. The ideal answer for anyone is to save as much as you can. From that savings you can enjoy vacations, rainy day funds, emergency funds and the knowledge that you are financially secure. However, not everyone has the salary to think this way. Many Americans live a more modest lifestyle that requires discipline when it comes to saving.

How Much Should I Save Each Month?

Ideally, everyone should save a minimum of 20 percent of their monthly salary. A significant savings is going to help you pay for things such as a down payment on a new home, college for your kids or peace of mind knowing that you have plenty of cash in the bank should something negative affect your current financial situation.

The money you save each month should be put in an account and not touched. This 20 percent is your savings. You can use it for emergencies, for retirement or to dip into at the holidays, for vacations or for your kids’ college expenses. Whatever you want to use your savings for is up to you, but you should always contribute at least 20 percent of your income each month to your savings account.

For example, if your monthly income is $10,000 you need to place $2,000 each month into your savings account. A savings of $24,000 per year is a lot of money. Consider this: If your monthly income has been around $10,000 for the past five years and you were consistent with saving 20 percent of that each month you would have approximately $120,000 in your savings account right now. Even if your income is much lower and you only bring home $5,000 per month and save $1,000 per month you would still have $60,000 in your savings account right now. Don’t you wish you’d started saving sooner?


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