How Much Money Should You Save Each Month?

Saving for the future is something that everyone should do, but the reality is that sometimes it's hard to find room in the budget for savings. If you find that all your money is gone the day after payday, with nothing left to put aside for the future, you're not alone. When you're trying to build up savings, either for an emergency or for retirement, the most important thing is that you just start. 

Clarify Your Goals 

You should have a least two separate goals for the money you save each month: emergencies and everything else. Your emergency fund should eventually have enough for you to live on for three to six months. The "everything else" category covers things such as car repairs, new clothes, and any taxes or insurance payments that you make in a lump sum. These things aren't technically emergencies, and you should set aside a portion of the expected expense each month.  

To calculate how much you need to add to your "everything else" categories each month, figure out how much you will need and when, and then divide the total amount by the number of months remaining. So, if you need $500 for an insurance payment in six months, divide $500 by six, and you will see that you need to put away a little more than $83 per month. When the bill comes due, you will have the money set aside already and won't feel the urge to dip into your emergency savings or swipe a credit card. 

Start Small 

If you haven't been saving because you don't think it's worth it until you have a large amount to set aside, think again. Even a few hundred dollars can have a significant impact in an emergency. If you can save just five or ten dollars a week, your little savings account will grow, and you'll start to build a small safety net. As you make progress on your "everything else" categories, you won't have many events that feel like emergencies just because you forgot to budget for them, and you won't reach for a credit card. 

Find the Money 

Sometimes it's helpful to start your savings fund with a lump sum to keep you motivated. If you can, try to sell a few things you may have around the house, or pick up a couple of odd jobs to jumpstart that emergency fund. If you get paid every other week, consider taking the money you get on those few three-paycheck months and putting all of it into savings. 

Don't Give Up  

If your savings account's growth seems painfully slow, don't get discouraged. Even when there are only a few dollars in there, it's better than nothing. Keep at it, setting up automatic transfers from your bank account if you can. It gets easier with time.