How Much Should I Save Each Month?

The most common savings rate recommendation is 20% of your income, but that rate isn’t realistic for many households. In the real world, the right amount depends on your expenses, debt, and financial goals.

Most people start saving with a smaller amount and increase it over time. Others might start their working life with fewer expenses and debts and the flexibility to set money aside, but find it harder to maintain that savings rate after starting a family.

Every person has unique financial responsibilities and goals, and achieving those goals doesn’t always allow for a 20% savings rate.

Common Savings Guidelines

One of the most common recommendations is the 50/30/20 budgeting rule, which suggests saving around 20% of your income. That 20% may include retirement, emergency savings, and other financial goals.

Some general savings benchmarks people often use include:

• 5% of income: Getting started and building the savings habit
• 10% of income: A solid savings rate for many households
• 15% of income: Often recommended for retirement savings
• 20% of income: Aggressive savings that includes multiple goals

There’s no strict ‘right way to save’ rule, but these can be helpful starting points. Even small, consistent savings can grow significantly over time.

OnPath Credit Union members looking for guidance on savings strategies can take advantage of our partnership with BALANCE, an industry-leading, nonprofit financial fitness program.

Balancing Retirement Savings With Other Financial Goals

While retirement savings is often the largest long-term goal, there are times when it may make sense to temporarily prioritize other goals. For example, someone saving for a home down payment or a car purchase may choose to direct more of their monthly savings toward those goals for a few years.

However, because retirement savings benefits so much from compound interest over decades, it is often helpful to put at least some money in retirement accounts when prioritizing other savings goals.

Even small retirement contributions in a saver’s early 20s can grow significantly over 40+ years.

Different Accounts for Different Savings Goals

Different types of savings accounts can be useful depending on how soon the money will be needed. Money that may be needed quickly is often best kept in a savings or money market account, while money that will not be needed for a longer period may be better suited for share certificates or retirement accounts. For example:

• Emergency fund: Savings or money market account
• Short-term savings (vacations, holidays, repairs): Savings account
• Longer-term savings: Money market or share certificates
• Retirement savings: IRA or other investment accounts

Using different accounts for different goals can help keep savings organized and make it easier to track progress toward each goal.

Automatic Transfers Make Saving Easier

Treating savings like a monthly bill and scheduling automatic transfers on payday may be a helpful strategy. Even small automatic transfers can add up over time and help savers build emergency funds and long-term savings without requiring constant decisions each month.

Consistency Matters More Than the Exact Number

There is no single savings percentage that works for everyone. Income, expenses, debt, and financial goals all affect how much someone can realistically save each month. What matters most is building a consistent habit and increasing savings over time when possible.

As income increases, many people increase their savings rate as well. Raises, bonuses, and tax refunds are often good opportunities to add to savings or retirement accounts.

Saving regularly, even in smaller amounts, is usually more effective than trying to save large amounts occasionally. Over time, consistency and compound interest are what make the biggest difference.

OnPath Credit Union Can Help You Make Saving Part of Your Monthly Routine

Saving becomes much easier when it is built into your monthly routine instead of treated as something that happens only when there is extra money left over. OnPath Credit Union offers savings accounts, money market accounts, certificates, IRAs, and investment options that can be linked to a checking account for automatic transfers.

Become a member today and take advantage of products designed to help normal savers reach their goals.