What is a reasonable % of income to save

wmb194

Putting aside the obvious issues, the lack of context and so on, if you have the opportunity to save up 50% of your income every month why wouldn't you grasp the opportunity with both hands? With the addition of the magic of compounding should see you in great financial shape in no time. Okay, your car might not be as nice as it could be...

Jami74

Mtrott71565 said:

 I guess I was just wanting to know how much money other people manage to save so I could gauge if I was budgeting properly but as others have pointed out, everyone’s circumstances are different.

You need to define for yourself what saving and budgeting means to you. I don't manage to save much at all. For me, 'savings' is the little bit of money left over after I have budgeted, it's the bit of money that I could spend on ice-cream or I could save for an earlier retirement or for something that I don't know I need yet. It is what's left after the needs (rent) and wants (Netflix) have been taken care of. Budgeting is the money I put away each month to pay my car expenses, the money I put away each month to cover Christmas and birthdays etc, I could tell you how much I budget for those things but it is likely you have a different car and a different sized family to me. 

You need to start backwards, how much do you need and when do you need it by? Divide that amount by the number of months until you need it, the answer is how much you need to save/budget. And of course, while you need to budget for big upcoming expenses, you need to pay your debt before getting too serious about saving.

MEM62

Mtrott71565 said:

NoMore said:

That 'rule' makes zero sense, you can't define your necessities as 50% of your income, your necessities are what they are, for some that  might be 80% of their income for others it could be 20% or any other percentage.

It was a model proposed and popularised in the US by Elizabeth Warren. 

Much of the financial wisdom relating to the USA is not relevant here in the UK.  There are way too many differences in the way finances work in the two countries.   

jbrassy

I wouldn't fixate on a percentage of income when it comes to saving. I have savings targets based on an actual figure that I'm going to put aside each month, e.g. £500, and I aim to save a specific amount over the course of a year, e.g. £6000. 

It all comes down to budgeting. Take your monthly income, then subtract all the essentials you have to pay, which are basically mortgage/rent and bills. Whatever is left over, try and set a realistic amount aside which you want to save. So, for example, if you're left with £1000 after essentials, you may want to set aside £300 as savings and leave £700 to spend throughout the month. If you have any of the £700 left at the end of the month, either sweep it into savings to give them a boost, or roll it over to the next month's spending money. 

One tip I would give is to set aside the savings the day after you are paid so you are not tempted to spend it throughout the month.