Saving money can feel overwhelming, but it doesn’t have to be!
Whether you’re dreaming of a nice emergency fund, saving for your dream vacation, or just trying to get a handle on your budget, knowing how much to save each month is the first step.
In this post, I’ll walk you through an easy, step-by-step guide to calculating your monthly savings goal—no complicated math required!
Let’s get started and take the stress out of saving.
How do you calculate how much money you can save every month?
Now, let’s break down how to calculate how much money to save every month.
Set Clear Financial Goals
Define your short-term and long-term financial goals.
Whether you’re building an emergency fund, making a down payment on a house, or saving for retirement, having specific objectives will guide your savings strategy.
Determine Your Monthly Income
Calculate your total monthly income. Include your salary, any additional sources of income, and bonuses.
Be sure to use your net income (after taxes and deductions).
Identify Fixed Expenses
List all your fixed monthly expenses, such as rent or mortgage, utilities, insurance, and loan payments.
These are the non-negotiable costs that remain relatively constant.
Account for Variable Expenses
Consider variable expenses like groceries, transportation, entertainment, and discretionary spending.
Track your spending for a few months to get a realistic average.
Set a Savings Percentage
A common guideline is to save at least 20% of your income.
However, the percentage can vary based on your financial goals and individual circumstances.
Adjust it to a level that’s realistic for you.
Calculate Your Monthly Savings Goal
Multiply your monthly income by your chosen savings percentage.
This gives you a baseline for how much you should ideally save each month.
Example Calculation
- Monthly Income: $4,000
- Savings Percentage: 20%
- Monthly Savings Goal: $4,000 x 0.20 = $800
Remember, it’s all about balancing your financial goals and your current income and expenses.
Adjustments may be necessary as circumstances change, but having a clear monthly saving goal puts you on the path to achieving your financial objectives.
More Money Saving Posts
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- 5 Ways to Save Automatically – Let’s explore five easy ways to save money automatically. These tips will help you build your savings effortlessly and keep you on track for your financial goals.
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