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How Much of Your Paycheck Should You Save

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If you’re wondering how much money you should save each month from your paycheck, the quick answer would be 20%. 

But, as with most things in personal finance, the exact amount you should save varies depending on your circumstances and financial goals. 

How Much Of Your Paycheck Should You Save | SaturdayGift

The answer to the question: “How much money should you save of your paycheck” is not one-size-fits-all. 

But there are some general guidelines that can help you get started. 

So, how much of your paycheck should you save?

Disclaimer: The content provided is for informational purposes only and should not be considered financial advice. Consult a financial professional for personalized guidance on budgeting and managing your finances. 

Aim for 20% savings – The 50/30/20 rule

According to the popular budgeting method, the 50/30/20 rule, you should aim to save at least 20% of your monthly take-home pay. 

This means that out of every dollar you earn, 

  • 50 % goes towards needs (such as rent or mortgage payments, groceries, and bills), 
  • 30 % towards wants (such as dining out or entertainment), 
  • and the remaining 20 % towards savings. 
50/30/20 Budget - Pie Chart | SaturdayGift

By following this rule, you ensure that you save a significant portion of your paycheck while leaving room to enjoy life.

To put 20% of your monthly income towards savings may seem like a lot, especially if you have other expenses such as high rent, student loans, or childcare costs. 

However, this percentage includes your retirement accounts, emergency fund, debt payments (above minimum), and other savings goals. 

If 20% seems too high, aim for at least 10% and gradually increase it as you pay off debt and lower your expenses.

Short-term and long-term savings goals should also be considered when determining how much to save each month. 

For example, if you have a specific goal to save for, such as a vacation or a new car, factor in that amount and adjust your overall savings percentage accordingly.

Start with an emergency fund

It’s important to have an emergency fund before you start thinking about saving for long-term goals like a retirement account or a down payment on a house. 

Building an emergency fund is like creating a safety net for life’s surprises.

It’s your financial backup plan, designed to cover essential expenses for 3-6 months, whether an unexpected medical bill, losing your job, or facing major car or house repairs.

This way, you won’t have to dip into your long-term savings or take on debt when something unexpected happens.

Once you have an emergency fund in place, you can focus on saving for short-term and long-term goals.

It’s recommended to have 3-6 months’ worth of living expenses saved in this fund.

Calculate your emergency fund amount by adding up your monthly expenses (rent, food, bills, etc.) and multiplying it by the number of months you want to save. 

For example, if your expenses total $2,000 per month and you want a 3-month emergency fund, you should aim to save $6,000.

Read more about the emergency fund here and grab free printable emergency fund trackers and worksheets to help you get started.


Retirement savings – saving for retirement

Aim for 10-15% of your income towards retirement.

Saving 10-15% might seem a lot, but think of it this way: the sooner you start, the more time your money has to multiply through the magic of compound interest!

If your employer offers a 401(k), take advantage of it and contribute at least enough to receive the full employer match. 

If your job doesn’t offer a retirement plan, you still have alternatives for retirement savings – for example, traditional Individual Retirement Accounts (IRAs) or Roth IRAs.

Debt repayment – paying off debt

In addition to saving for emergencies and retirement, it’s essential to also allocate some money toward paying off any existing debt. 

Prioritize paying off high-interest debt, such as credit card debt, as soon as possible. 

Once you have paid off your high-interest debts, focus on paying down other debts, such as student loans or car loans. 

You can use the debt snowball method or the debt avalanche method to tackle your debts effectively.

Short-term vs long-term Savings Goals

It’s important to have a balance between short-term and long-term savings goals. 

Short-term goals (such as saving for a wedding or vacation) can motivate you to save and provide some financial flexibility in case of unexpected expenses.

Long-term goals (such as buying a house or saving for retirement) require more time and consistent saving over a longer period. 

Saving time for short-term goals can vary from a few months up to 5 years, while long-term goals require a longer saving horizon, typically 10 years or more. 

Set realistic and achievable goals for both short-term and long-term savings.

Short-term goals

Time: <5 years


  • Vacation
  • Wedding
  • Car down payment
  • Home renovation 
  • Emergency fund

Saving for short-term goals can be done through a high-yield savings account, CDs, money market accounts, or other low-risk investment accounts. 

You don’t want to invest your short-term savings in volatile markets, as you may need the money sooner than expected. 

Keep these funds separate from your emergency fund and use them only for their intended purpose.

Long-term goals

Time: 10+ years


  • Retirement
  • Down payment on a house 
  • Children’s education funds 

Investing long-term savings in more aggressive investment options is better than keeping the money in a high-interest savings account. 

Consult with a financial advisor to craft the perfect investment strategy that aligns with your goals and how much risk you’re willing to take on.

Piggy Bank - How Much Money Should You Save | SaturdayGift

How to save money from each paycheck

Here are a few tips on how to save money from each paycheck.

1. Start with something, no matter how small

The key is to save something each month, even if it’s just a tiny percentage of your paycheck. 

As you get used to living on a slightly smaller budget, you can gradually increase how much you save.

RELATED POST: Savings Tracker Printable – 51 Cute & Free Templates

2. Automate your savings

One great way to ensure consistent savings from each paycheck is to set your savings on autopilot. 

Set up an automatic transfer from your checking account to your savings account on a specific date each month. 

You won’t even have to think about it, and you’ll build your savings without extra effort.

3. Cut back on unnecessary expenses

If you struggle to save 20% of your paycheck, look at your expenses and see where you can cut back. 

You may be spending money on things you don’t need, such as multiple streaming services or eating out too often. 

Every little bit you can save will add up over time.

RELATED POST: Expense Tracker Printable – 26 cute & Free Spending Logs

4. Make saving a habit

Saving money may seem daunting, but it becomes easier over time if you make it a habit. 

To stay motivated, set specific goals, track your progress, reward yourself for reaching milestones, and involve friends or family in your savings journey.

Remember, the key is consistency – putting money into savings – even small amounts – adds up over time. 

You can reach your savings goals and secure a financially stable future with diligence and determination. 

RELATED POST: 21/90 Rule – How Long Does It Take to Form a Habit

RELATED POST: Habit Tracker Printable – 43 Cute & Free Printable Habit Trackers

When is the best time to start saving money?

It’s never too early or late to start saving for your future. 

But the earlier you start, the better.

And the best time to start saving money is now. 


Saving money from each paycheck may seem challenging, but it’s an essential step toward financial freedom.

Having an emergency fund, saving for retirement, paying off debt, and setting short-term and long-term savings goals can create a solid financial foundation for yourself and your family. 

Aim for 20% of your paycheck, but the most important thing is to get started (even with small amounts) and stay consistent. 


I hope this post answered your question: “How much of my paycheck should I save?”. 

Happy saving!

Guidelines - How Much Money Should You Save Of Your Paycheck | SaturdayGift

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