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How much of your paycheck should you save each month?

Saving money can be hard. But if you're looking to master your finances, smart saving is one of the best habits to form. However, knowing that you should save and actually saving are two wildly different things.

For wannabe savers, setting a monthly goal is an easy way to start putting money aside. But how much of your paycheck should you save every month? Keep reading to find out this magic number, plus the rule that can help make saving come as naturally as spending.

The value of monthly savings

Everyone knows the feeling: the direct deposit hits and suddenly the world is your financial oyster. In those moments, it can be hard to find the motivation to add to your savings. But resisting the temptation to splurge can pay off in the long run.

One of the greatest benefits of setting up a monthly savings strategy is the peace of mind it can bring you. If you're ever faced with an emergency or a last-minute purchase, knowing you have a financial safety net can be a life-changer. In some cases, your savings could even prevent you from taking on unwanted debt.

But savings can be just as fun as they are useful. From using it for vacations to large purchases, your savings could give you the boost you need to meet your financial goals.

A monthly savings strategy is ideal because it can be incorporated into your unique budget and tailored depending on its purpose. No matter your financial situation, monthly savings can help you build up your savings. But before you put a penny aside, you'll first need to develop a strategy that works for you.

Finding your savings timeline

At this point, your next question is probably "How much should I save each month?" But to find out how much you should save each month, it's important to set a savings timeline.

A timeline is useful because it helps you determine the savings rate you'll need to meet your goals. And speaking of goals, savings timelines can help with those too. By being intentional with what your savings are for, you're more likely to stay on track to achieve them.

There are plenty of timelines to consider when making a savings goal. Here are a few of the most common to consider.

Less than 1 year

Timelines of less than 1 year are ideal for short-term savings goals. This can include trips, holiday expenses, or even tax payments—things that are generally too much to pay out of pocket for.

Depending on the dollar amount of your savings goal, you might have a higher savings rate with this timeline. When that happens, you'll need to put more into savings every month to meet your goal by the year end deadline.

Less than one decade

Some savings goals might require more than a year to complete, but don't quite achieve long-term status. This could be anything like a new car or a down payment for a home. For these goals, you'll likely save a smaller portion of your paycheck than you would with a 1-year timeline.


If you're like most people, retirement is the biggest savings goal you'll ever attempt. Whether you're planning on relocating, downsizing, or simply relaxing, it's a good idea to set aside some savings. Typically, saving small over a long period of time is enough to help you reach a lifelong savings goal like this one.

Establishing savings goals

Now that you have an idea of your savings timeline, it's time for the fun part: goals.

A savings goal can do wonders for your motivation. Rather than simply saving because it's something you should do, a goal gives you something specific to save for. With a purpose, you're less likely to pull from your savings to buy that thing you just saw in an Instagram ad.

It would take an eternity to go over all the savings goals you could set for yourself. To get you started, we'll break down three goals to answer, how much should you save a month?


It's generally recommended to save 10% to 15% of your total income for retirement. That sounds like an extreme amount, but don't stress just yet.

Some employers match retirement contributions, so whatever you save, you might be able to double it to help you get your final amount. For instance, if your goal is to save 10% of your income for retirement, all you'll need to do is set 5% aside every month if your employer matches that.

Emergency fund

An emergency fund is one savings goal that everyone should hold. After all, you never know when you might be faced with sudden fees or an unexpected job loss.

The rule of thumb is to have 3-9 months' worth of expenses in your savings account. That way, you'll be protected in the event of a long-term financial emergency.

Everything else

When it comes to savings, there are no limits. No matter what you're saving for, setting a specific monetary value and a timeline increases your chance of meeting your savings goal.

Establishing a goal is enough for some people to grow their savings. But those looking for a simpler method might benefit from a different strategy known as the 50/30/20 rule.

The 50/30/20 rule

The 50/30/20 rule is a savings method that distributes all your earnings into three categories. Following this strategy, you'll set aside 50% of each paycheck for essential purchases, 30% for nonessentials, and 20% for savings.

For example, if you took home a $2,000 paycheck, you'd have $1,000 for essentials, $600 for nonessentials, and $400 to save. This is a popular strategy because it's an easy way to grow your savings quickly and without too much effort.

The 80/20 rule

To simplify the 50/30/20 rule even further, you could also opt for the 80/20 rule. This method works the same way, except your money is split between non-savings (80%) and savings (20%).

The 80/20 rule is great if you don't make a detailed budget every month (even though you should totally make a monthly budget). It gives you a way to save money without the extra categories involved in the 50/30/20 rule. Plus, if you ever decide you need to start budgeting, the 80/20 rule is a great way to practice.

When 20% is too much

You might not have the means to put 20% of every paycheck into savings, and that's okay! These rules might seem like they’re set in stone, but they can be altered to fit your financial situation, whatever it may be.

If 20% is too much to save, feel free to start with 5%, 10%, or 15%. Even 1% of every paycheck will add up over time. Your savings are solely for your benefit, and simply adding as much as you can each payday is perfectly sufficient.

So, how much of your paycheck should you save each month?

If you're still wondering "How much of my paycheck should I save?", you should know that there is no one-size-fits-all answer.

According to most savings rules, 20% of every paycheck is the number to shoot for. But if you can't meet that goal, it doesn't mean you should stop saving entirely.

Instead, make your savings strategy work for you. Save a smaller percentage of each check, or adjust your percentage as your check fluctuates each payday. No matter what, you'll be saving, and your future self will thank you.

How to save money with every paycheck

Regardless of how much you earn, saving a portion of every paycheck can be a challenge. However, there are some tricks you can use that will make you more likely to meet your savings goals. Test out some of these and see how fast you can grow your savings.

Pay yourself first

Paying yourself first is a good habit to get into. It's tempting to add to your savings after you've paid for the week's expenses. But saving as soon as you get paid ensures at least some of your income makes it to your savings account.

This is also a useful trick for those who tend to make impulse purchases. The more money you have in your bank account, the more likely you are to spend it. On the other hand, if the money is whisked away into your savings on payday, you'll never even get a chance to splurge.

Pay yourself first, and you'll not only minimize impulse buys but also feel comfortable saving more in the first place.

Set up automatic transfers

This trick goes hand-in-hand with paying yourself first. Some banks offer automatic transfers for those looking to build their savings. That way, a select portion of your paycheck will go directly to your savings account as soon as your direct deposit hits. Automatic transfers take paying yourself first to the extreme because you don't even have to lift a finger. Simply set your percentage and wait for the money to flow in (but not out).

In addition to automatic transfers, Varo offers a Save Your Change feature that rounds up every transaction to the nearest dollar and puts it into your savings. These coins add up fast, giving you a nice surprise the next time you check your savings account balance.

Start with something

The truth is, all savings are good savings. If saving a percentage of every paycheck feels unattainable, it's perfectly fine to save a few dollars here and there—even small savings can add up over time.

For example, setting aside $10 every week leaves you with almost $500 after one year. No matter what you're saving for, this will put you a good deal closer to your goal.

Additionally, there's no need to save for emergencies, retirement, and vacation all at once. Feel free to prioritize one before turning your attention to the others. The bottom line is, your savings journey is yours to control as you see fit.

Meet your savings goals with help from Varo

Finding the perfect savings strategy is great, but finding a bank that will take care of it for you is even better. With a Varo Savings account, you'll gain access to auto-saving tools that can help you grow your savings without too much effort. Plus, a -high annual percentage yield means your money will earn its own money just for sitting pretty in your account.

There's no better time to save than the present. Check out Varo today to open a fee-free savings account that will help you grow your money in no time.


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