How Much of Your Paycheck Should You Save Each Month

 Your ideal savings rate depends on your specific, long-term reasons for saving. Learn how much of your paycheck should you save each month here.

 Only 40 percent of Americans say that they could afford to cover a $1,000 financial emergency such as an unexpected medical bill or a car repair.

Are you part of this group? If not, you're definitely not alone.

Nearly all of us can likely agree that we ought to save more of our monthly income. How much of your paycheck should you save, though?

Read on to get an answer to this question, as well as your other most pressing savings-related queries.

How Much of Your Paycheck Should You Save?

There's tons of conflicting information out there about how much money you should save out of every paycheck. There isn't one right answer to the question, either.

The following are some strategies you can implement when trying to figure out what percentage of your paycheck you ought to save:
10 Percent Rule

The 10 percent rule says that you should aim to put 10 percent of your income in savings each month.

The great thing about this strategy is that it feels more attainable to most people. Taking out 10 percent of your paycheck doesn't feel like too much money, but it can add up pretty quickly over time.

Think about it. If you earn $3,000 per month after taxes and you put 10 percent of it in savings, that's $300 per month. In a year, you'll have saved $3,600!
50/30/20 Rule

Another good rule to follow is the 50/30/20 rule. According to this rule, you ought to work toward putting 20 percent of your income in savings each month. Fifty percent ought to go toward necessities, and the remaining 30 percent is meant for discretionary spending.

It might take a while for you to work up to saving 20 percent of your income. If you can save that much, though, you'll be in a much better position than if you were only saving 10 (or less). Using the same example from above, if you earn $3,000 per month after taxes, you can save $7,200 in a year by putting away 20 percent each month. 

How to Start Saving More Money

Whether you want to start with the 10 percent rule or jump right into the 50/30/20 rule, you might be feeling a bit daunted right about now. If you're not sure where to begin when it comes to saving more money each month, here are some tips to help you out:

Evaluate Your Spending

Start by taking a good look at your spending from the last month. Where did most of your money go?

Did you spend it paying bills? Eating out? Taking trips to Target?

Once you know where your money is going, it'll be easier for you to figure out where you're spending too much and start making adjustments. 

Cut Down on Food Costs

For many people, a significant portion of their monthly income goes toward food. This might include groceries, snacks, and eating out at restaurants.

Take a look at your food budget and consider whether you can reduce your spending in this area. Do you need to limit yourself to one meal out per week? Do you need to buy store brand groceries instead of the name brand options?

Consider making these switches and then setting aside the money you save at the end of the month.

Switch Services

Giving up cable and switching to a streaming service subscription can help reduce your monthly spending by quite a bit.

Most streaming services cost less than $20 per month. You could pay for two and still spend less than you do on cable.

Use Coupons and Apps

There are lots of apps and browser extensions you can use to find coupon codes and discounts. Some of these will also give you cashback when you shop at certain stores.

Use these tools and put the money you save or get back directly into your savings account.

Get a Side Hustle

If you've made every possible cut to your budget and still can't put away 10 or 20 percent, you may need to look for ways to raise your income. Consider picking up a side hustle so you have more money to work with each month.

There are lots of ways for you to earn additional money while enjoying a flexible schedule. Try driving for Lyft or Uber or delivering food for Seamless or GrubHub.

Tips for Handling Money Emergencies

These tips can be very helpful as you begin your journey toward building up your savings account. What happens if a financial emergency hits before you've built up your emergency fund, though?

If you're in a bind and don't have enough saved to cover it, here are some tips to help you get your head above water:

Borrow From Friends or Family

Nobody likes having to ask friends or family for money. In most cases, though, this is a better option than borrowing from a bank or credit union. You'll have lower interest rates taking this approach, or possibly even no interest at all.

Negotiate

Sometimes, it's worth it to try and negotiate. You might be able to get a medical bill or car repair bill reduced if you explain your financial situation. Many lenders are also willing to work with you if you reach out to them right away.

Apply for a Personal Loan

If nothing else works, try applying for a personal loan. There are lots of no credit loans available that have reasonable interest rates.
 
You can use them to help you make ends meet during a difficult time. Make sure you have a repayment plan in place when you take out the loan, though.

Start Building Your Savings Account Today

Alright, you have answers to questions like "how much of your paycheck should you save?" and "how can I start saving more money?" 

Now, it's time to get to work. Keep this advice in mind as you start working toward putting more money in your savings account.

It might take a while for you to build up a safety net. If you continue working at it, though, you'll have a healthy emergency fund saved up and won't have to worry when a money emergency strikes.

Do you want to learn more about saving money or managing it wisely? If so, check out some of our other finance-related articles today.
 

 

 
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