How Much Should You Save Per Month? Follow the 50-30-20 Rule

1. How Much Should You Save Per Month? Follow the 50-30-20 Rule If you are wondering ‘how much money should I save per month’, then you are not alone. How much you save every month can have a huge impact on your financial future. Setting a monthly savings goal is a critical action step to achieving financial goals and build assets. There is not a set amount for every person because your “enough” saving might be someone’s “nowhere near adequate.” The best way to determine how much to save a month is to apply the 50-30-20 rule. Let’s understand what it is and how you can use this thumb rule to save money and gain financial independence. The 50-30-20 Rule Spend 50% of your salary on necessities, such as rent or mortgage payments, utilities, groceries, school fees, transportation expenses, and debt payments. Keep 30% aside for discretionary items. And, 20% of your income should go towards savings. So if you’re still thinking ‘how much should I save per month’, let’s take an example here. So, for instance, if you earn $60,000 annually, then your saving goal should be to save $1,000 in a month. If you earn $75,000 and want to save 20 percent, then you must aim for $1,250 saved in a month. However, the Financial Planning Association of Singapore advocates saving at least 10% of your gross salary. But it is a good decision to save more. If you belong to the high-earning group, you can increase your savings percentage to 30% of your salary. Create a Budget You cannot stay on track to achieving your long-term financial goals unless you budget your expenses and savings. Write down on paper to see how much income you're bringing in, how much you’re spending, and what kind of progress you're making on your savings. If you’re just starting out, you may find it difficult to save the same amount every month. That’s not a problem. But establish a savings habit. You will find that with budgeting you are able to set a savings goal every month based on your gross salary and spending. Earn more to save more Your spending may affect your savings, so consider earning more. You can increase your savings every month by getting a new high-paying job. Improve your skills so that you can upgrade your professional career. Try freelancing services for pay or turn your hobby into paying job. Invest to save more You can increase your savings if you know how to invest in stocks, shares, and trading assets. Don’t just accumulate cash, invest them wisely to earn profits. Look for the best performing asset class in terms of returns. Held these assets for the long-term. However, do your due diligence before investing in any asset class. Be aware of investment scammers. These scammers may guarantee extremely high returns on your investment, but you must know ‘how to identify a scammer’ to prevent investment fraud and avoid putting your hard-earned money into scams.

2. Conclusion Saving money on a monthly basis is a common goal among Singaporeans. If you want to optimise your savings, follow the 50-30-20 rule and the tips described above. Take a look at your financial health and find out how much you can save per month based on your income and expenses. It may seem challenging in the beginning, but with good tips, solid habit, and the right planning, you can save more money for your future.