How much should I save each month? Rules of thumb and examples

The short answer to "how much should I save each month?"

How much should I save each month? There's no single right number, but two rules of thumb give you a sensible range:

• 10% of your income. Nibud advises saving 10% of your income. It also notes you don't have to hit it exactly every month, as long as you reach it on average.
• 20% of your take-home pay. The 50/30/20 rule puts 20% toward savings and extra debt payments, with 50% for needs and 30% for wants.

These are starting points, not tests. Rent, debt, children and where you live all change what's realistic. A better approach is to work out what your goals actually need, then check whether that fits between 10% and 20%.

Pay yourself first

Whatever amount you choose, the way you save matters as much as how much. "Pay yourself first" means your savings leave your account on payday, by automatic transfer, before you spend anything.

Saving "whatever is left at the end of the month" rarely works, because there usually isn't much left. When the transfer happens first, you simply budget with what remains. Most banks let you set up a recurring transfer in a couple of minutes.

How much to save by goal

Rules of thumb are fine, but goals give the number a reason. Most people are saving for some mix of these three.

1. An emergency fund

An emergency fund is money set aside for genuine surprises: losing your job, a broken boiler, an urgent repair. A common guideline is three to six months of essential costs. Nibud also points out that the right size of a buffer differs per household.

To find your monthly amount: decide your target, then divide by how many months you want to take to reach it. For example, three months of €1,600 essentials is €4,800. At €250 a month, you'd get there in a little over 19 months.

Use our emergency fund calculator to find your own target.

2. Retirement

Retirement saving often happens partly through work. In the Netherlands, most employees build a pension through their employer's scheme. In the UK, workplace pension auto-enrolment has a minimum total contribution of 8% of qualifying earnings: 5% from you and 3% from your employer, according to GOV.UK.

If you have a workplace pension, check your payslip to see what's already being saved. If you're self-employed or have no workplace scheme, you'll need to set aside something yourself. Long-term money is often invested rather than kept in cash; see our guide to investing for beginners.

3. Short-term goals

For anything you know is coming within a few years, such as a holiday, a new laptop, a wedding or a house deposit, use this simple sum:

Goal amount ÷ months until you need it = monthly saving.

A €1,200 holiday in 10 months needs €120 a month. Keep each goal in its own savings pot, so you can see the progress and don't accidentally spend one goal's money on another.

A worked example

Here's how one person with €2,500 take-home pay might split a 20% savings target across their goals.

If 20% doesn't fit, the same person saving 10% would put aside €250 a month. They might put all of it toward the emergency fund first, then spread it across goals once the fund is full.

What to do on a low income

If your income barely covers essentials, a 10% or 20% target can feel insulting. It's fine to start much smaller. Some ideas:

• Start with a fixed small amount. €25 or €50 a month is still €300 to €600 a year. A small buffer can stop one surprise bill turning into debt.
• Save a percentage that grows. Begin at 2% or 5%. On €1,700 take-home, 5% is €85 a month, or €1,020 a year. Add one percentage point each time your income rises.
• Save windfalls. Holiday pay, a tax refund, a thirteenth month or cash gifts can go straight to savings, even if your monthly amount is small.
• Check what you're entitled to. Allowances and benefits you haven't claimed can make a real difference. In the Netherlands, check whether you qualify for toeslagen such as healthcare or housing allowance.
• Look at fixed costs. One cheaper phone plan or insurance policy can free up more than many small cuts. See our list of ways to save money every month.

Raise the amount over time

The amount you save today doesn't have to be the amount you save forever. Two simple habits help it grow without much pain:

• Save half of every pay rise. If your take-home pay rises by €100 a month, move €50 of it to savings and enjoy the other €50. That's €600 a year more saved, and you never miss money you didn't get used to spending.
• Review once a year. Pick a fixed moment, such as January or the month your contract renews, and check whether your goals or costs have changed. Raise your automatic transfer if you can.

When a goal is reached, such as a full emergency fund, don't let that monthly amount drift back into spending. Point it at the next goal straight away.

Common mistakes

• Waiting until you can save "properly". Starting small now beats starting big later.
• Keeping savings in your current account. Money you can see next to your spending money tends to get spent. Use a separate account.
• Saving while paying high interest on debt. Credit card interest is usually much higher than savings interest. Once you have a small buffer, paying down expensive debt often makes more sense. Our guide on how to pay off debt fast explains how.
• Investing your emergency fund. Money you might need at short notice shouldn't be somewhere its value can fall.