Want to pay cash for a $10,000 car in five years? You'll need $167 per month. Divide by the number of months remaining to see how much you should save. Write your ideal savings goal target and deadline. (If it's easier, list broad categories like "home repairs," "holidays" and "wedding.") ![]() ![]() Make a list of major expenses within the next decade, ranging from replacing your gutters to throwing your wedding. Can you save this monthly? If so, you'll build a six-month emergency fund within the next year. How much do you need to survive?ĭivide that number in half. Assume that if you lose your job, you'll sacrifice luxuries such as pedicures or your premium cable TV package. How can you save such a large sum? First, calculate your monthly cost-of-living. You should also consider establishing an "emergency fund" that can cover 3-9 months of your living expenses. Our online tools can help you calculate your needs for retirement and other financial goals. If you save 5% of your income and your boss matches another 5%, you've accomplished a 10% savings rate. Sound daunting? Don't worry: your employer match, if you have one, counts. You should consider saving 10 - 15% of your income for retirement. ![]() Now back to the original question: How much should you save a month? Let's break this down by goal: 1. Retirement is the ultimate long-term savings goal. You might use this money to replace your dishwasher, fix your car's timing belt, cover a major insurance deductible, stay afloat when you're between jobs and make a down payment on a home. Your short-term savings can get used to vacation in Aruba, buy holiday gifts or pay your taxes. There are three timelines you should consider: Less than 1 year Your ideal savings rate depends on your specific, long-term reasons for saving. When someone asks how much money they should save each month, I throw them a curveball reply:
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