How much should you save each month? There is no universal figure. The right amount depends on your income, expenses, goals and stage of life. Someone renting in a major city will not have the same capacity to save as someone with lower fixed expenses or who has already achieved some of their main financial goals.
That is why percentages such as 10% or 20%, or the well-known 50/30/20 rule, can serve as useful guidelines. But they should not replace the two most important calculations: how much you can realistically save and how much you need to save to achieve your goals.
Saving 10% or 20% can be a useful benchmark
Saving between 10% and 20% of your net income is a common guideline.
However, neither percentage is a universal target. If essential expenses absorb a large proportion of your income, saving less may be perfectly reasonable. And if you have a high capacity to save, 20% may not be enough.
The 50/30/20 rule works in much the same way: it can help you review how your income is allocated, but it does not mean you must save exactly 20%.
First, calculate how much you can save
The first important figure is your actual capacity to save.
Start with your usual net income and subtract essential and recurring expenses: housing, food, utilities, transport, insurance, debt repayments and other commitments.
You should also set aside money each month for expenses that do not arise monthly. For example, if an annual insurance policy costs €600, you can allocate €50 per month towards it.
This money is not strictly speaking savings that increase your wealth: you are simply spreading a known expense over time.
A simple formula would be:
Net income – regular expenses – provisions = capacity to save
If you earn €2,000 per month, spend €1,450 and set aside €150 for annual expenses, your theoretical capacity to save would be around €400.
Next, calculate how much your goal requires
The second figure is different: how much you need to save to achieve a specific goal.
The formula is simple:
Amount needed ÷ number of months = monthly savings target
If you want to accumulate €6,000 over two years:
6,000 ÷ 24 = €250 per month.
If you can save €400, the goal appears achievable. If you can only set aside €200, there is no magic percentage that will solve the problem.
In that case, you will need to change one of the variables:
- Extend the timeframe.
- Reduce the cost of your goal.
- Cut expenses.
- Increase income.
This distinction between what you can save and what you need to save is far more useful than focusing solely on a percentage of your salary.
Not all savings serve the same purpose
It is also important to understand why you are putting money aside.
There is a difference between:
- Setting aside money for a known annual expense.
- Building an emergency fund.
- Saving for a deposit on a home.
- Allocating capital to a long-term investment.
All of these involve putting money aside today, but they serve different purposes.
Before asking whether you should save 10%, 20% or more, it therefore makes sense to identify which goals you are funding and when you will need that money.
What should you prioritise before increasing your investments?
One of the primary purposes of savings is usually to create a financial safety margin.
As a general guideline, an emergency fund can cover several months of essential expenses, although the appropriate amount depends on factors such as income stability and the number of dependants.
You should also review your debts. If you have loans or credit cards with high borrowing costs, it may make more sense to allocate part of your surplus towards repaying them before increasing the amounts you invest.
What if your income changes every month?
When income is variable, setting an excessively high monthly savings contribution can cause problems.
One alternative is to base your budget on your most predictable income and set aside a percentage of any additional payments when they arrive.
Extra salary payments, bonuses and other one-off income can also help you reach a goal faster without requiring you to permanently increase your monthly savings.
Your savings amount does not have to stay the same
The right amount changes with your circumstances.
It may increase if your salary rises or you finish repaying a debt. It may decrease if housing costs rise, new financial commitments arise or you go through a period of lower income.
The purpose of your savings can also change. Once you have completed your emergency fund, for example, you can redirect those contributions towards other goals.
That is why reviewing your savings target when your income, structural expenses or priorities change makes more sense than maintaining a fixed percentage forever.
Once you have set the amount, turn it into a system
Once you know how much you want to save, automating your contributions can help you maintain the habit.
A regular transfer shortly after payday means you do not have to make a new decision every month. If you would like to explore this further, you can read our techniques for saving more consistently or our guide to financial management tools.
So, how much should you save each month?
Saving 10% or 20% can provide a useful starting point, but the figure that really matters comes from answering two questions:
How much can I save sustainably?
And
How much do I need to save to achieve my goals within my planned timeframe?
Your monthly savings target should be where the answers to both questions meet.
And if they do not match, the solution is not to force yourself to meet an impossible percentage, but to adjust your timeframe, your goal or the structure of your finances.
The best amount to save is not the highest possible figure, but the one that serves a clear purpose, is sustainable and allows you to make progress without putting unnecessary pressure on your budget.
