How Much Money Should I Save Each Month?

If you want to have some savings behind you then you may wonder how much money you should be saving each month. It is wise to transfer some money when you get paid into a savings account so that you know that you will always automatically do it and you will; know the money is available to do so. It is a good idea to do this because otherwise you could find that you will not have enough money left at the end of the month to do it because you have spent it. So, doing it first means that you will have to budget so that you can manage without this money. If you calculate things properly you should know how much you will be able to save. It is not always easy to get it right, but you can do some calculations which might help you.

Work out How Much You Earn

To start with you will need to know how much money you have coming in each month. This should be fairly easy to do as you are likely to have just a few or even just one income source. So, this will include any salary that you earn, any benefits you get, child maintenance payments, interest, pensions and things like this. It will be easier if you know how much it is after tax too, or else you will have to work out how much that is and take it off.

Work Out How Much You Spend

This will be a trickier thing to do because you will have a lot more things that you will pay for. You will find that there are certain items that you pay for regularly every month, but there will be some things that you pay for less often. This makes it tricky to work out what you spend, but it can be best to work out an average. Then you will have a figure that you will be able to use. 

Decide What to Save

At this point you should be able to take away the amount you spend form the amount you earn and see what is left. This figure will be the amount that you can afford to save. However, you may not want to save it all as you may want some for overpaying debts or other things. If you tend to find that you are spending more than you earn, then this could be a much trickier decision. It is good to discover that this is happening as you should be able to do something about it and change what you are doing to make sure that you are not overspending each month. For example, you could look carefully at your spending and see whether you are paying too much for things and therefore can switch to cheaper items or you might want to buy less items or look for opportunities to earn more. Once you are earning more you are spending you will be in a position to save.

If you are putting the money in an instant access account then it will not matter if you save too much. If you find that you need the money then you will be able to get it back out of the savings account. However, if you are tying the money up in a notice account or bond then it is a good idea to think hard about whether you should put all of your money in there and not have anything to fall back on, in the case of an emergency.

Review

It is a good idea to review the situation every so often. You will want to check whether you are putting in the right amount of saving according to what you can afford. You could find that you will still have some money left and so perhaps you should put a bit more in or you could find that you are struggling to manage so you will need to take some out. It is wise to review this every few months, at least to start with so that you know that you have chosen the right amount.