Knowing how to save money can give you peace of mind when unexpected circumstances arise. It can also bring you long-term security and help you enjoy more of the things you love. But how much should you save each month? There’s no magic number, and it depends on your individual situation. Follow these simple rules to make sure you have enough squirelled away for when you need it.
How much should you save?
When you’re thinking about how to save money, you need to look at your monthly income and outgoings.
One rule of thumb is to save roughly 20% of your monthly income.
This is based on the 50 30 20 rule, which recommends that:
- 50% of your income should go towards your ‘needs’ (rent/mortgage, bills, food etc.)
- 30% should go towards your ‘wants’ (socialising, holidays etc.)
- 20% should go towards saving or paying off debt
Find out more about the 50 30 20 rule and how to apply it to your budget.
Remember to always prioritise paying off high-interest debt, such as credit cards or payday loans. The interest you’re paying on this is likely to outweigh any interest you earn on your savings.
Are you making the most of your savings?
Finding the right savings account is key to maximising your savings. This is because inflation could be eating into the interest you make on your money, meaning it’s not growing as fast as you’d like.
Struggling to save money?
Regardless of your situation, saving money is key to building financial security and planning for your future.
