How Much Money Should I Save?

Updated November 1, 2020 . AmFam Team

Wondering how much of your paycheck you should be saving for retirement, emergencies, and the future? Learn how to get started from American Family.
Budgeting for expenses and savings can be a stressful topic to approach for anyone. Add external stressors — such as the uncertainty of a global pandemic or a period of economic downturn — and you have a recipe for uneasiness and confusion. With many households now looking for ways to tighten their financial belts, we’ve gathered together some tips you may find helpful during tough times. Our guide highlights a number of ideas to get you in the saving mindset. Check them out and see what suits your needs best!

At a glance, here are five effective methods of keeping more of your money in your pocket.

  • Craft a budget. Step one of saving money starts with crafting a budget. Take inventory of how much you have and where it goes. One popular budgeting strategy is referred to as the 50/30/20 rule — a method of saving that breaks your income into percentages — which we’ll discuss more a bit later.
  • Use the 30-day rule. A great strategy for saving, this tip suggests that when you want to make a purchase, you first wait 30 days. Essentially, when you see an item you want to buy, hold off. Write the item on a note card, record how much it costs, and reevaluate it at a later date. If you still want the item after 30 days, then consider making the purchase.
  • Track your spending. After you set your savings goals, consider looking at your spending habits. Many common items, like a cup of coffee, can rack up quite a sum at the end of the month.
  • Avoid debt. If possible, avoid making credit card purchases you can’t pay off at the end of the billing period. The easiest way to save money is by reducing the likelihood that you’ll be paying interest on your credit card.
  • Consolidate debt. Sometimes unexpected expenses happen, and you're left with debt to manage. Consider discussing your options with a financial advisor who may be able to consolidate your debts into one lower interest payment plan.

Now, let’s take a closer look at how to save money.

How Much Money You Should Save Each Month?

The 50/30/20 Rule

How Much Should I Save For Retirement?

How Much Should I Save For Emergencies?

Saving For Large Expenses

Learn How To Budget & Save For Your Dreams

How Much Money Should You Save Each Month?

Saving money is about financial stability, and at the center of financial stability is a plan for the future. When you’re saving money, you’re creating a healthy buffer between yourself and the unexpected. You’re protecting yourself and your dreams.

When you ask yourself, how much should I save, it’s important to remember that everyone is different. Your income, unique needs, and many other variables will play a big part in your saving strategy.

So how much should you save a month? Check out the 50/30/20 calculator (Opens in a new tab) on MoneyUnder30 to calculate a rough estimate. This calculator will break your monthly earnings into percentages 50 percent for fixed expenses, 30 percent for discretionary expenses, and 20 percent for savings. It makes budgeting simple and fun!

The 50/30/20 Rule

With the 50/30/20 budgeting method, you’re taking a big step to planning your finances. The method works like this.

  • 50% — Used for fixed expenses. Expenses you expect to pay each month at roughly the same amount. Fixed expenses would be things like utility bills, car payments and your auto insurance.
  • 30% — This amount is for more discretionary or variable purchases. These are things like coffee, dining out, entertainment, and clothing. Things like groceries, which can vary from week-to-week, are typically included in this budget as well.
  • 20% — This is the amount you save. Most financial advice suggests saving at least 20% of your take-home income.

So how does that look in practice? Let’s say a person earns $62,000 a year.

  • 50% — $31,000 —This is the amount that person will use for rent, bills, and other fixed monthly expenses.
  • 30% $18,600 — This would be the amount of discretionary spending used for food, clothing, entertainment and other things.
  • 20% $12,400 — This would be the amount saved in a year’s time if the budget is adhered to.

It’s important to remember that 50/30/20 is a template to start you off, not a rule. You may find that some adjustment will need to be made depending on your personal financial situation. For instance, maybe you want to save more and spend less on discretionary items. Or, maybe you want to allocate more toward expenses and reduce your percentage of income to save. Your breakdown could look much different than 50/30/20 and that’s ok!

Be sure to read further on how to make a budget.

How Much Should I Save For Retirement?

Your future begins now! When considering the best time to save for retirement, it’s never too early — or too late — to start. Many financial advisors and financial institutions agree that a person should expect to save about 15% of their annual pre-tax income for retirement. While that may seem like a lot for an individual, it’s important to know that employer-match contributions through 401(k) also count toward that 15% goal. Equally important to remember is that 15% is just a general guideline. To get a more accurate picture of your retirement future, you can use a retirement calculator.

What is a reasonable amount of money to retire with?

According to a 2019 graph of the median household income (Opens in a new tab) from 2005-2018, published by, the average household income in the United States was around $62,000. This will be used as our starting point for demonstrating how much a person is recommended to have saved for retirement based on age. The data presented here is based on information from an article published by the online savings bank Ally (Opens in a new tab).

Your general guide could look something like this.*

Saving for Large Expenses

Now that you’ve learned some strategies for saving for emergencies and saving for retirement, let’s talk about some of life’s more fun milestones. Maybe your savings goals take you in a different direction, like a vacation, a new car or your first home. If you’re planning a large purchase, you may want to have a strategy in mind for putting money aside. A good starting point is thinking about how much to save monthly. By chunking up the expense, you’ll make the thought of saving up for a big purchase a little less daunting.

For example, let’s say you’re going to buy a new car in a year and want to aim for 20% down. If the average new car is $40,000,* you’ll want to save at least $8,000 for a down payment. If you then divide the $8,000 down payment over the span of 12 months the amount of time until you make your purchase that’s $667 you know to set aside each month.

Learn How to Budget & Save for Your Dreams

No matter where your dreams take you, we’re here to help you see them through. By taking control of your finances, creating a budget and reading more helpful tips on saving, your future is in your hands. All it takes is a little patience, practice and discipline to make it all come true.

*Average new car cost based on a 2019 report (Opens in a new tab) from

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.

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