How Much Money Should You Really be Saving Each Month? This Is the Best Answer

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KEY POINTS

  • Saving money is important to have a secure future, but many people aren't sure how much to save.
  • Surprisingly, there's one right answer for everyone.
  • Save as much as you can, and ideally at least 20% of your income.

The answer may surprise you.

Most people know it's really important to save money.

Setting aside some cash instead of spending everything you earn can help you to be prepared for emergencies so you're able to avoid debt. It can also enable you to live comfortably as a retiree since you can't survive on Social Security alone. And it can allow you to cover big purchases without using a personal loan or putting them on a credit card.

But, how much money should you be saving? That's a trickier question -- but the reality is, there's actually one right answer for everyone.

This is exactly how much you should be saving

When it comes to saving money, the correct answer to how much you should save is to save as much as you can.

Ideally, you'll want to make sure this is at least 20% of your income. Setting aside that much can help ensure you have the money you need as a retiree once your paychecks stop. It can also enable you to devote some of your savings to accomplishing other important financial goals beyond just getting ready for your later years.

But, hearing that you should save 20% can be discouraging if you are currently saving nothing. And the reality is, it's better to save whatever amount you can even if you can't get close to putting aside 20% of your income. Saving as little as $1 is better than nothing because putting aside any of your money to help you in the future is better than spending all that you earn.

Once you start saving, that little bit of money can add up over time. It can start to earn interest, which helps your money grow even more. And, perhaps more importantly, you can get into the habit of allocating some of your money towards long-term goals rather than just meeting short-term needs. This will enable you to start developing the habit of saving so if you can increase your income or find expenses to slash, you'll be more likely to save any extra money for the future rather than spending it.

Of course, if you are already saving 20% of your income, you should still follow this advice and save as much as you can. If you have extra money left over after covering your essential expenses and devoting some of your cash to wants, there's no reason to spend the money just for the sake of it. If you can save more than the recommended 20%, you can open up the door to doing things like retiring early or building wealth that will give you financial freedom.

How can you increase your savings

If you want to start saving as much of your money as you can, the best way to do that is to track your spending and then make a budget that is reasonable based on your current expenses -- but that also maximizes the amount you're saving.

You can take a look at where your money is currently going and ask yourself if the expenditures are worth it or if you would be better off using that money to help you build a secure future.

Once you start with the mindset of trying to save as much as you can, you may be surprised to find that you can find at least a few expenses to cut to help make that happen. This approach can end up really paying off for you in the long run.

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