How much money should you save per month?

Do you save everything you owe? How much money do you have to save each month? It is possible that you too have asked yourself these questions at some point. These are two seemingly simple issues, but we don’t always know how to address them.

The percentage of salary that it is advisable to save varies according to your age and your income. The more you earn, the more options you will have. Still, saving isn’t just for the rich.

Everyone can save a part of their salary. The key is knowing where to start and the monthly amount to save to reach your financial goals. That’s the most important thing.

Before continuing, there are three things that they do not tell you about what you should save each month and that you should be clear about:

• The important thing is the percentage of your salary that you save, not the amount in euros. This way you will know your savings rate and a figure without context.
• A person with a normal salary who saves a high percentage of his income will build his financial freedom sooner than a person with a high salary, but who saves a small percentage.
• The more you save, the better you invest, because you can invest more in the long run.

Now that you know the importance of saving an adequate amount, let’s see what it should be and how to do it.

What percentage of salary you should save: the general rule

The average savings rate of Spanish families is 14.8% of their disposable income according to data from the National Institute of Statistics (NIS). Its a lot? Is it little? Should we save more? The answer about the ideal amount of monthly and annual savings will depend on three factors:

• Your income (and expenses). A high salary can help you save a higher percentage of your income as long as you have controlled expenses, especially famous expenses.

• Your age. The younger, the less expenses, but also usually less income. As a general rule, this is the highest percentage of savings you can contribute, although it will be fewer euros.
• Your goals. Being a supporter of the FIRE movement and wanting to retire at 40 is not the same as wanting to enjoy a golden retirement at 60 or having in mind buying a house and also the house on the beach. Tell me what you want and I’ll tell you how much you need to save (and invest).

Is there a common monthly savings percentage for all cases? One of the most repeated recommendations is the famous 50/30/20 rule, which would serve to distribute all your income.

According to this rule, known as The Balanced Money Formula, you should allocate 50% of your income to fixed expenses, 30% to variable expenses (including leisure), and 20% to long-term savings (including investing). It’s that simple, not that easy.

Under this premise, this is the distribution and the amount you should save each month according to your income:

This way of finding out how much you should save each is just that, a method of distributing your expenses that allows you to set aside an amount of monthly savings, but not the only one. In this article, we tell you other ways to distribute your expenses such as the 20-10-10-50-10 rule.

In any case, saving 20% ​​of your salary automatically each month is a good goal. If you are still far from that monthly savings percentage, in the free course we give you the trick to reach it with a table on how to save money.

If you don’t save, you’ll start saving and if you already save, you’ll discover how to save more and with less effort.

How much should you save according to your age?

What amount of salary should be saved at each stage of life? Does age affect the percentage you should save from your income? Not necessarily, but usually does. The reason is that income and financial obligations tend to move hand in hand over time. Both affect your ability to save

In other words, when you are young you usually have few obligations and expenses. In theory, your saving capacity is high. The problem is that salary is also limited. The result is that you can save a good percentage of your salary, but this usually translates into little money in euros.

As you progress professionally your income will increase and in theory, you will be able to save more. The problem? It is also easy for your expenses to grow together. This is known as the rising spending trap or rising spending spiral. If, in addition, you move from one neighborhood to a better one, it is also easy for you to spend more and save less.

If, in addition, you can save the same percentage of your salary as before, your saving capacity will increase. If you can already increase it, it will trigger. You can typically save more and more money as you get older.

The reason is that you will enter more money and your expenses will decrease over time. The normal thing is that they first grow when you become independent, have children, or buy a house. Then they will decrease as you finish paying for the house, the children become independent or you can do without certain expenses such as life insurance.

The following table summarizes the part of your salary that you should save each month based on your age.

From there, the more money you save each month, the faster you’ll move toward financial freedom. It’s that easy.

How much should you save based on your salary?

Your salary also affects your ability to save. You can save with a salary of 1,000 euros, but it is easier to do so when you earn more money.

The reason is very easy to understand. With a limited salary, you will need to dedicate a greater percentage of your income to essential fixed expenses. If you earn more, you can choose between spending more or saving more, it’s that easy.

In the following table you will see the minimum that you must save each month according to your income and also how much people who apply the pre-savings method save.

As you can see, some are able to save half their salary without having a very high income. How are they able to do it? Applying the best savings tricks and being very clear about your vital objectives.

If you find yourself unable to save anything, you can start by applying a savings challenge like the 52-week one to get into the habit. Here you can see the savings challenges that work best.

How much money should you save each month if you earn 25,000 euros a year? Following the general rule of 20%, you should allocate 5,000 euros per year or 416 euros per month to savings. And according to our savings percentage tables, the minimum would be 17% or 4,250 euros per year. Do you want to be among the best? In that case, set aside 12,500 euros each year, if you can.

The importance of saving: the difference between saving little or saving a lot

Without savings, there is no paradise. Saving is the basis of healthy finances. The more you save today, the faster you will build your financial freedom. Saving helps you plan for your future and be happier today.

Are you still not able to separate the maximum percentage of the tables? Don’t worry or worry. It is normal and that is precisely why we created the free course, to help you achieve them.

The most important thing at this point is that you are clear about the importance of saving in your future. There is a huge difference between saving the recommended minimum and going beyond.

This is what happens with a person who earns 1,500 euros a month and saves the recommended minimum at each stage of his life compared to another who saves that percentage and 10 percentage points more, and who is always among the best. Look at the difference between what each of them manages to save based on how much they save from their salary per year.

Do you want to be among the best savers? In Buzzbongo’s articles, we give you the keys to achieve it and multiply those savings thanks to compound interest.