How Much Should You Save? Simple Guidelines for Beginners

Saving money is a key part of building a strong financial foundation. But how much should you actually save? There’s no one-size-fits-all answer, but there are helpful guidelines and strategies that can make it easier to get started. This article will walk you through the basics of setting a savings target, explain popular rules of thumb, and offer tips for making your savings plan work for you.

Why Having a Savings Target Is Important

Setting a savings goal gives your money a purpose. It helps you plan for the future, handle unexpected expenses, and feel more secure. Without a target, it’s easy to spend what you earn and leave little for emergencies or future plans.

Having a clear savings goal:

• Makes it easier to track your progress
• Helps you prioritize saving over spending
• Gives you motivation to stick with your plan

Money is a tool for planning, security, and achieving your goals. Saving is one of the best ways to put that tool to work for you.

Popular Savings Guidelines (Like the 50/30/20 Rule)

If you’re not sure where to start, some simple rules can help you figure out a good savings target. One of the most popular is the 50/30/20 rule:

• 50% of your income goes to needs (like rent, food, and bills)
• 30% goes to wants (like eating out or hobbies)
• 20% goes to savings and debt repayment

For example, if you earn $2,000 a month:

• $1,000 for needs
• $600 for wants
• $400 for savings and debt

The 50/30/20 rule is just a guideline. You can adjust the percentages based on your situation. The key idea is to make saving a regular part of your budget, not just something you do if there’s money left over.

Other common guidelines include:

• Save at least 10% of your income if 20% feels too high to start
• Aim for $500–$1,000 in emergency savings as a first goal, then work toward 3–6 months of living expenses

How to Set a Realistic Savings Goal

Everyone’s finances are different. Your savings target should fit your needs, income, and goals. Here’s how to set a goal that works for you:

1. Start With Your Income and Expenses

• List your monthly income (after taxes)
• List your essential expenses (needs)
• See what’s left for savings and wants

2. Decide What You’re Saving For

• Emergency fund (unexpected expenses)
• Short-term goals (like a new phone or trip)
• Long-term goals (like a car, home, or education)

3. Pick a Realistic Amount

• If you can save 20%, great! If not, start smaller—every bit counts
• Even $5 or $10 a week adds up over time

4. Make It Automatic

• Set up an automatic transfer to your savings account each payday

Adjusting Your Savings Based on Your Situation

Life changes, and so will your ability to save. Here are some factors to consider:

• Income: If your income goes up, try to increase your savings rate
• Expenses: If you have high expenses, focus on building a small emergency fund first
• Debt: If you have high-interest debt, you might split your savings between paying off debt and building your emergency fund
• Goals: Your savings target may change as your goals shift (for example, saving for a move or a big purchase)

Remember, it’s okay if you can’t save a lot right away. The important thing is to start and build the habit.

Tips for Staying on Track With Your Savings

• Track your progress: Use a notebook or app to see how much you’ve saved
• Celebrate milestones: Reward yourself (in a small, budget-friendly way) when you reach a goal
• Review your budget regularly: Adjust your savings amount as your situation changes
• Avoid dipping into savings for non-emergencies: Try to keep your savings for true needs or planned goals
• Make saving automatic: Automatic transfers make it easier to stick with your plan

For more on building good money habits, see [Money Basics].

Frequently Asked Questions About Saving Amounts

How much should I have in my emergency fund?

A common recommendation is to save $500–$1,000 as a starter emergency fund. Over time, aim for 3–6 months of living expenses if you can.

What if I can’t save 20% of my income?

Start with what you can—5% or 10% is better than nothing. The habit is more important than the amount at first.

Should I save or pay off debt first?

It depends. Many people start by building a small emergency fund, then split extra money between savings and paying off high-interest debt. For more, see [Debt Fundamentals: Borrowing Money Wisely].

Can I save for more than one goal at a time?

Yes! You can have separate savings for emergencies, big purchases, or fun goals. Just make sure your total savings amount fits your budget.

Saving money is one of the best ways to use your money as a tool for security and future plans. Start with a goal that fits your life, use simple guidelines like the 50/30/20 rule as a starting point, and remember—it’s okay to start small. The most important thing is to begin and keep building your savings habit over time.