How much should I save each month?

Turn your rainy day fund from a puddle into a reservoir with our guide to sensible saving

Felicity Hannah - Virgin Money Living Mentor

by Felicity Hannah | Independent Money Mentor

Award-winning personal finance and consumer affairs journalist


It can be hard to get into the saving habit. That’s true whether you’re a parent with a mortgage or a student whose responsibilities don’t stretch far beyond sustaining a regular supply of beans for your toast.

Saving money isn’t very exciting and it requires some discipline, or at least the ability to recognise that your old clothes still look great on you, and last year’s smartphone still works just fine. Savings protect you; they provide a buffer that keeps you from financial difficulties and they stop you from plunging into debt every time something unexpected happens like a broken boiler, a particularly painful MOT, an urgent dentist’s appointment or alien invasion. OK, possibly not the last one.

You don’t need to be a big earner to save money. Put a small amount aside each month and it will swiftly add up to some serious savings. Here’s what you need to know…

What should I be saving for?

Before you decide how much you are going to save, it’s a good idea to have an idea of your goal. The first thing every newbie saver needs is an emergency fund to cover minor financial hiccups (see aforementioned boilers, MOTs, all-conquering ETs) and major financial disasters like losing your job.

Most experts recommend having at least three months’ worth of salary saved and some suggest it should be as much as six months’ worth. Don’t worry, you don’t have to save it up all at once. You can work up to it slowly but surely.

After that, you can start saving for specific goals. That might be anything from new clothes or a summer holiday to a house deposit or retirement. Saving for short-term goals helps you avoid putting things on credit so you stay out of debt, while saving for bigger goals gives you longer-term security.

Everyone should try to save up an emergency fund. But after that, before you start saving for other goals, it’s a really good idea to prioritise paying down expensive debt like credit cards. After all, you’ll pay more in interest on debt than you will earn on savings.

How much should I save a month?

Whatever you can afford! Some people will advise a fixed percentage of your income, perhaps 10 or 20 percent. However, that’s not necessarily the best way to approach savings. Only you know how much money goes on the essentials in your life – rent or mortgage payments, student loan repayments, and those other pesky unavoidable costs that take an oversized bite out of your salary.

The amount you can afford to save depends on your spare income and you won’t know how much that is until you have worked out your actual budget. Don’t panic – that’s easier than you might think and will help you take control of your income and outgoings. The key thing is to set a savings target that is realistic and achievable.

What if it’s not a lot?

So, you’ve drawn up your budget, worked out how much you can afford to save a month and it’s not as much as you had hoped. It’s easy to feel disillusioned with the idea of making savings if it’s happening very slowly. But it’s important to remember that your savings will gradually grow. Over time they really will add up to something substantial and even a small amount of savings can help keep you out of the red when something unexpected happens. And if you want to get an idea of how long it will take you to save up a set amount – or if you’d like to know how much you’d need to save each month to reach your saving goal in a set time – then there are online calculators that can help. Try the savings calculator on the Money Advice Service website – there’s no advertising or agenda, just simple help with the numbers.

Watching those pounds rack up in the saving account will make all the pain worthwhile.

So, go on, give it a go and see just how much better you’ll feel when you’re putting aside some money each month.

Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.