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How Much Should You Put Into Savings Each Month

  • June 14, 2021

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It is not uncommon for that number to be zero for a lot of people actually!

But if you aren’t saving, you aren’t helping yourself or your future out. (Or your kids!)

So, even though it can be challenging, finding ways to save is crucial for your financial health. And the first step to saving is knowing how much to save.

Thankfully there is actually a guideline on that! 

The 50/30/20 budget rule is a guide to budgeting and saving. It was developed by Elizabeth Warren, a U.S. Senator from Massachusetts and a Harvard bankruptcy expert.

She and her daughter, Amelia Warren Tyagi co-wrote a personal finance book that details the budgeting rule: “All Your Worth: The Ultimate Lifetime Money Plan.” 

According to this budgeting rule, 50% of your income is what should be spent on your needs, 30% should go towards wants, and 20% is how much of your income you should save each month. And that amount should be calculated from your after-tax (take home) pay.

50% Needs

Half of your take-home income should be spent on all your necessities. Your housing payment, groceries, utility bills and car payment are a few examples.

It can add up to a lot! Sit down and calculate the amount your needs total. If it is more than half of your paycheck, you may need to adjust your lifestyle. Rent a room out, or sell your car for something less expensive.

30% Wants

Thankfully you get to spend 30% on whatever you want! That is a pretty decent percentage. So figure out what that number is at the beginning of the month and don’t go over it.

Wants can include entertainment, travel, clothing and going out to eat. It’s basically your fun budget. 

But one thing to note is that certain items like cable t.v. may seem like a “need” but they actually fall into the “want” bucket. So, make sure you are categorizing things correctly.

20% Savings

You should be saving 20% each month. The reason for this number is that it is what is estimated to be what you need to save in order to retire. 

Make sure you are saving your money in the right spot. Opt for a high-yield savings account that gives you a percentage of extra money. Or save your money into a 401K to really increase your savings!

Take advantage in any way you can. If you work for a company with a 401K match, make sure you contribute the maximum allowed for the match! That means you are making more money. If your company will match 100% of your 401k deduction up to 6% of your salary, then contribute the full 6%. That way you aren’t leaving any money on the table.

One common question with the 50/30/20 rule is where do my credit card payments fit into this? 

The minimum payments you have on debt is actually classified as a “need.” So, it falls in your 50% needs bucket.

But getting out of debt is crucial for your financial health. So if you can make extra payments each month on debt, it is a good idea.

Maybe use some of your 30% wants allocation to pay extra on debt instead. In the long run it is worth it. Or find an extra part-time job or side hustle like this AirBnb one that allows you to make extra!

The important thing with saving is that you do it! Even if all you can save is a few dollars a month, start today. It is worth it!


I’m Cara Berkeley, a blogger, investment property owner, and full-time marketing executive. I’ve learned that thinking outside the box can make all the difference and want to share my tips and tricks on smart money management. My blog at  is all about helping you find new ways to save money, make money and have fun doing it!