One of the most common personal finance questions is: how much money should I save each month? In the UK, the answer depends on your income, expenses and financial goals. While there’s no one-size-fits-all figure, there are proven guidelines that can help you find the right amount for your situation.
This article breaks it down in a simple, realistic way.
The 20% Rule: A Common Guideline
A popular rule of thumb is the 50/30/20 budgeting rule:
- 50% of income for needs (rent, bills, food, transport)
- 30% for wants (entertainment, dining out, hobbies)
- 20% for savings
Under this guideline, saving around 20% of your monthly income is ideal. However, this may not be realistic for everyone — especially with rising living costs in the UK.
If 20% feels too high, don’t be discouraged. Saving anything consistently is far better than saving nothing at all.
What If You’re on a Low or Variable Income?
If money is tight, aim to save 5–10% of your income or even a small fixed amount each month, such as £25 or £50. The habit matters more than the amount.
As your income increases or expenses reduce, you can gradually increase your savings rate.
How to Calculate Your Personal Savings Target
To find a realistic monthly savings amount:
- Work out your monthly take-home pay
- List essential expenses (housing, utilities, food, transport)
- Identify non-essential spending
- Decide what you can save without causing financial stress
Your savings target should support your life — not make it harder.
What Should You Be Saving For?
Understanding why you’re saving helps determine how much you should put aside.
🛟 Emergency Fund
Aim for three to six months of essential expenses over time. This protects you against job loss or unexpected costs.
🏠 Short-Term Goals
Holidays, home improvements or car repairs may require saving a fixed amount monthly.
👵 Long-Term Goals
Pensions, house deposits and long-term investments often need regular, consistent contributions.
Saving While Managing Rising Living Costs
With the cost of living in the UK increasing, many people struggle to save. If that’s your situation:
- Focus on saving small amounts
- Automate savings right after payday
- Review bills and subscriptions regularly
- Redirect any money saved from switching providers into savings
Even £10–£20 a week can build up over time.
Adjust as Life Changes
Your savings amount isn’t fixed forever. Changes in income, family size, rent or mortgage costs may require you to reassess.
Review your savings plan at least once a year — or whenever your circumstances change significantly.
Final Thoughts
So, how much money should you save each month in the UK? Ideally, aim for around 20% of your income, but remember that consistency matters more than perfection.
Save what you can, build the habit, and increase your contributions when possible. Over time, regular saving — even in small amounts — can provide security, flexibility and peace of mind.
