How Much Money Should You Save Per Month And How?

“How much money should you save per month?” This is a very valid question, and there is no simple answer. Of course, we often talk about a certain amount of money that you should save each month.

• But is this real?
• And how much should that amount be and how do you really get started if you have no idea where to start?
• And what if it doesn’t fit into your financial life?

Since these are a lot of questions that can come up on this topic, today we’re taking a deep dive into the world of saving and exploring two crucial questions: How much money should you save per month and which budgeting method is best? Because these are questions that are crucial to achieving financial stability and freedom.

Are there any strict rules about how much money You should save per month?

Yes, there are certain rules about how much money you should save per month.

But, and hell there is a but, you don’t have to follow the rules.

Why?

While financial rules can be a good guide if you have no idea where to start, they can also put a lot of pressure on you.

I imagine you can easily become depressed if you can’t meet expectations of how much you should save or invest.

That’s why I like to unfollow the rules when I feel like there’s no consensus or I can’t do it at the moment. If you feel the same way, you can set your own savings rule that reflects your personal life.

That doesn’t mean you can’t follow a rule later if you think it would fit into your life. No, it’s not about closing all the doors, but rather about learning how to enable yourself to save money every month when one rule isn’t working.

Whatever you decide, there are existing rules that can serve as guidelines.

However, you can set your own rule because no matter how much money you can save per month, it is always better to start saving than not to start.

So let’s look at the different rules for how much money you should save per month and whether any of these rules are right for you.

👉 By the way, begin with a robust financial plan, which can be surprisingly simple! Haven’t crafted one yet? Take a look at my guide and grab a free template.

How much money should you save per month?

And again, the question of how much money you should save per month depends on many factors, including your income, your financial goals, your living circumstances and your risk tolerance.

Here are some general guidelines that can help you set an appropriate savings rate.

1. The 50/30/20 rule

This rule recommends dedicating 50% of your income to essential expenses like rent, groceries, and bills, 30% to personal expenses like entertainment and restaurants, and 20% to savings. This could be a good starting point for defining your savings goals.

The 50-30-20 rule is designed to help you balance your money to achieve your dream of financial freedom without having to meticulously track every penny. Instead, focus on getting better deals and saving more money on big expenses like your mortgage, car loans, and other fixed costs so you can reach a 20% savings rate.

→ It is suitable for you if you want a simple structure and an overview of your finances.

2. The savings goal method

With this rule, you set specific savings goals based on your long-term financial goals. Do you want to save for retirement, buy a home, or travel the world? Calculate how much money you need to save each month for each goal and prioritize your savings efforts accordingly.

With this method, your savings goals are less abstract because you define them precisely in advance. You can focus on that and know exactly how much money you will have saved in the end.

→ This method is suitable for you if you need a specific goal to focus on when saving.

👉 Read more: Achieve your financial goals – The ultimate monthly savings plan for young women

3. The Pay-Yourself-First-Method

With this method, you treat your savings like a bill and transfer a fixed amount to a separate savings account immediately after receiving your salary. This way, you make sure you think about your financial future first before spending your money on other things.

→ This rule can be combined with other savings rules as it is always a good idea to put your savings in a separate savings account before any other expenses.

4. The 10% rule

The 10% rule is an idea where you save 10% of everything you earn towards your various financial goals such as emergency fund, retirement planning or other investment goals. This can be a good rule of thumb to ensure you’re setting aside money regularly, even if your financial situation is more complex.

Saving 10% of your salary (after taxes) is a good start if you’re just starting to save or don’t make enough money to save a higher percentage.

For example, if you have 2,100 euros (after taxes) available as income every month, you can save 210 euros per month using the 10 percent savings rule. After one year you would have saved €2,520.

Using this method to build your savings account is an excellent step, but it’s important to challenge yourself to set aside more money as you begin to earn more income or reduce your expenses.

→ Even though saving just 10% might take you longer to reach your goals, it’s still worth making saving a habit and keeping some money in the bank.

What rule do I use as a financial blogger?

Personally, I use the Savings Goal Method along with the Pay Yourself First Method.

Although I like numbers and math, I like to have a clear idea of my financial goals and what I’m saving for. This helps me stay focused, motivated and responsible. I can also calculate exactly how much money I need, when I need the money, so I know how much money I need to save each month.

Now that you have an overview of some savings rules, let’s move on to the different budgeting methods that will help you apply your personal savings rule.

What is the best budgeting method to save how much money per month?

As with the savings rules above, there is no one-size-fits-all approach to budgeting methods, as different methods may work differently well for different people.

However, here are some popular variations you can consider:

1. Zero-based budgeting

With this method, you assign a task to every dollar you earn. This means there will be no money left over at the end of the month because you’ll use it all for planned expenses, savings goals, or debt reduction.

This is a method that requires you to know and plan your expenses exactly so that after deducting all expenses from your income, your budget is zero.

Since this method requires detailed planning and tracking of expenses, it is ideal for you if you want tight control over your finances and want to ensure that no money is wasted.

→ This can be helpful if you want to reduce debt and save for specific financial goals.

👉 Read more: Money Management 101: Make a Budget That Works for You

2. The 50/30/20 method

This method, which is also recommended for setting your savings rate, can also be used as a budgeting method. It helps you divide your expenses into three categories: basic needs, wants and savings.

The 50/30/20 rule offers a balanced approach that combines flexibility with clear savings goals.

→ It provides a simple and easy-to-understand structure if you’re just starting to create a budget. It is also ideal for families and households with multiple sources of income.

By dividing your total income and managing it according to the rule, you can better control your expenses and pursue common financial goals.

3. The Envelope System

With this method, you divide your cash into different envelopes, each representing a specific expense category like groceries, rent, or entertainment. This way, you’ll have a clear idea of how much you can spend on each category.

→ The envelope system may be helpful if you tend to go over budget or have trouble keeping track of your spending. It is also for you if you prefer cash and prefer to pay with physical money rather than cards or digital payment methods.

4. The 60% solution

This method suggests that you allocate 60% of your income to fixed expenses like rent and bills, 10% to fun spending, 10% to long-term savings goals, and 20% to debt reduction or short-term savings.

→ If you have a stable income, the 60% solution may be suitable. Because if your income is constant, you can easily plan to use 60% for fixed expenses.

It’s also a simple budgeting method with clear guidelines on how much to spend on fixed expenses, fun expenses, long-term savings goals, and debt reduction.

Which method do I use as a financial blogger?

I have been using the zero-based budgeting method for a long time. I would like to know where my money is going. Since I am the boss of my money, I can spend my money more relaxed. I don’t feel any urgency. It’s like putting my money to work the right way.

how much money should You save per month? Find it out!

Deciding how much money you should save each month and which budgeting method works best for you takes time, self-reflection, and experimentation. There is no one-size-fits-all solution, but by using guidelines like the 50/30/20 rule, zero-based budgeting, or the envelope system, you can better understand your financial situation and develop effective savings and budgeting strategies. Always remember that the key to successful saving and budgeting is setting realistic goals, being disciplined, and sticking to your plans. With the right approach, you can achieve your financial goals and create a solid foundation for your future.