How Much to Put in Savings Calculator

Saving money is a fundamental financial practice that helps build wealth, achieve financial goals, and prepare for unexpected expenses. This calculator helps you determine how much to put into savings based on your income, expenses, and financial goals.

How to Use This Calculator

To use this calculator, follow these steps:

Enter your monthly income in dollars.
Enter your monthly expenses in dollars.
Select your savings goal from the dropdown menu.
Click the Calculate button to see your recommended savings amount.

The calculator will show you how much you should save each month based on the 50/30/20 rule, which suggests spending no more than 50% of your income on needs, 30% on wants, and saving 20%.

Formula Used

The recommended savings amount is calculated using the following formula:

Savings Amount = (Monthly Income - Monthly Expenses) × Savings Percentage

Where:

Monthly Income - Your total income each month
Monthly Expenses - Your total expenses each month
Savings Percentage - The percentage of your disposable income you want to save

The savings percentage is determined by your savings goal:

Short-term goals (e.g., emergency fund): 20%
Medium-term goals (e.g., vacation, home improvement): 30%
Long-term goals (e.g., retirement, education): 50%

Worked Example

Let's say you have a monthly income of $5,000 and monthly expenses of $3,500. You want to save for a medium-term goal.

Calculate your disposable income: $5,000 - $3,500 = $1,500
Determine your savings percentage: 30% (for medium-term goals)
Calculate your savings amount: $1,500 × 0.30 = $450

According to this example, you should save $450 each month to reach your medium-term goal.

Savings Strategies

Here are some strategies to help you save more effectively:

Automate your savings: Set up automatic transfers to your savings account each payday.
Cut unnecessary expenses: Review your budget and eliminate spending on non-essentials.
Increase your income: Look for ways to earn extra money, such as a side hustle or overtime.
Use savings apps: Apps like Acorns or Digit can help you save small amounts automatically.
Set specific goals: Having clear savings goals can motivate you to save more.

Remember, saving money is a habit that takes time to develop. Start with small amounts and gradually increase your savings as you get comfortable with the process.

FAQ

How much should I save each month?: The amount you should save each month depends on your income, expenses, and savings goals. Use our calculator to determine the recommended amount.
What is the 50/30/20 rule?: The 50/30/20 rule is a popular budgeting guideline that suggests spending no more than 50% of your income on needs, 30% on wants, and saving 20%. This rule can help you balance your budget and save for the future.
How can I save more money?: To save more money, consider automating your savings, cutting unnecessary expenses, increasing your income, using savings apps, and setting specific goals.
Is it better to save in a bank account or investment?: For short-term goals, it's generally better to save in a high-yield savings account. For long-term goals, consider investing in stocks, bonds, or other investment vehicles to grow your money over time.
What should I do if I can't save as much as I want?: If you can't save as much as you want, focus on saving what you can and look for ways to increase your income or reduce your expenses. You can also adjust your savings goals to be more realistic.