How Much Should You Save Monthly? Simple Formula Anyone Can Follow

Saving money is one of the most important habits you can build in life. Whether you earn a modest salary or have a high-paying job, the way you manage your income matters more than the amount you earn. But many people still ask the same question: “How much should I save every month?”

The answer isn’t one-size-fits-all. However, there is a simple, time-tested rule that works for almost everyone. In this article, we’ll explain the 50-30-20 rule, share real-life examples, and show you how to use a Savings Calculator to plan your finances better. Plus, we’ll give some practical tips on saving for special life goals like marriage, a new home, or a dream vacation.

What Is the 50-30-20 Rule?

The 50-30-20 rule is a straightforward budgeting method that divides your after-tax income into three main categories:

  • 50% Needs: These include your essentials like rent, groceries, electricity, school fees, medical expenses, etc.
  • 30% Wants: These are non-essential expenses like dining out, shopping, streaming services, hobbies, and entertainment.
  • 20% Savings: This portion should go into your savings and investments — for your emergency fund, future goals, or retirement.

This rule gives you a balanced lifestyle while ensuring your future is secured.

How Does It Work in Real Life?

Let’s understand this with a practical example.

Example 1: A Young Professional in Bengaluru

  • Monthly take-home salary: ₹60,000
  • 50% for Needs = ₹30,000 (rent, groceries, transport)
  • 30% for Wants = ₹18,000 (eating out, shopping, Netflix)
  • 20% for Savings = ₹12,000 (SIP, PPF, emergency fund)

Example 2: A Family in Mumbai

  • Combined income: ₹1,00,000
  • 50% Needs = ₹50,000 (school fees, EMI, groceries)
  • 30% Wants = ₹30,000 (dining, gifts, outings)
  • 20% Savings = ₹20,000 (mutual funds, children’s future)

Even if your salary is lower or higher, the same principle applies. Just stick to the ratio and adjust your expenses accordingly.

Use the Savings Calculator to Make it Easy

Rather than doing manual calculations every time, you can use our free Savings Calculator.

Just enter your income, spending, and monthly goals — and get a clear picture of how much you should save each month. It’s a smart tool designed to help people take better control of their finances without any confusion.

Tip: Try adjusting the numbers and see how small lifestyle changes can boost your monthly savings.

Why Saving Monthly Matters

Here are a few strong reasons why consistent monthly savings are important:

  • Emergencies come unannounced — Medical bills or sudden repairs can hurt if you are unprepared.
  • Future goals need money — Be it your child’s education, a new car, or retirement, everything has a price.
  • Peace of mind — Knowing you have backup funds gives confidence and mental comfort.
  • Better financial discipline — Regular savings make you financially wise and future-ready.

Set Specific Saving Goals

Saving without a purpose often leads to inconsistency. Instead, set personal goals and break them down into monthly targets.

Here are some examples:

  • Saving for a house down payment
    Goal: ₹10,00,000 in 3 years → Save ₹27,778/month
  • Wedding fund
    Goal: ₹5,00,000 in 2 years → Save ₹20,833/month
  • Dream vacation to Europe
    Goal: ₹3,00,000 in 18 months → Save ₹16,667/month

When your savings are attached to a dream, it feels motivating rather than burdensome.

What If You Can’t Save 20%?

Not everyone can stick to the 50-30-20 rule right away, and that’s okay.

Here’s what you can do:

  • Start small — Even saving 5% is better than nothing. Gradually increase it.
  • Automate savings — Use SIPs or auto-debits to make saving a habit.
  • Cut unnecessary wants — Review subscriptions, reduce takeaways, or buy in bulk.
  • Increase income — Freelance work, selling unused items, or skill upgrades can help boost earnings.

The idea is to build a consistent saving habit — even if you start with small amounts.

Final Thoughts

Financial freedom doesn’t happen overnight. It’s built through small, regular steps — and monthly savings play a key role in that journey. The 50-30-20 rule is simple but powerful, and when combined with proper tools like a Savings Calculator, it can completely change how you manage your money.

Don’t wait for the “right time” — start saving today. Set a clear goal, calculate your ideal saving amount, and take that first step.

Helpful Links:
Savings Calculator
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Published on June 05, 2025
Category: Finance