Posted in: Save Money

How to Decide how much Money to Put in your Savings Account

If you want to have some savings, then you might be advised to save a bit of money each month. Being able to save regularly is a great thing to do because it means that you will be able to build up some funds which you can use to fall back on if you get unexpected expenses, save up for something good or just have as security in case you lose your job. However, it is not easy to know how much you should be saving each month.

Calculate how much money you need each month

To start with you need to work out how much money you need to spend on all of your essentials. We all have things that we have to pay out for such as tax, rent, utilities, food etc. You need to sit down with you bank statements and actually write all of this down so that you have a record. Make sure that you do not just look at one month as you need to make sure that it is typical so that you are not under or over estimating it. You may find that you have a few months that are really expensive and you will need to take this into account.

Work out what is left

Once you have worked out what you have to pay for then you will be able to work out what is left when you take this away from what you are paid. This amount of money is what you will pay on luxury items and this will include things like hobbies, holidays, gifts etc. The amount that this is will vary for everyone. Some people may have nothing left and therefore have nothing to save. Some people may have loads left. This amount may also change month to month. You will want to make sure that you calculate this for a typical month so that you can judge based on these figures. Do think about what you might do on the months where you have significantly less money though. You might feel that you should still save the same amount and just spend less on luxury items or that you should keep some money in your current account to cover that direct debit.

Decide how much to save

Obviously you will not be able to save more money than you have. However. If you have a quite a lot of money you may want to save some and keep some to pay for fun things. You will need to think about how much you want to keep to spend on fun things and how much you want to save. This could depend on whether you are saving up for a specific thing and have a deadline or whether you just want to build up some money for the future. You might want to save a larger quantity initially, so that you can get a nice chunk of money in your account. This can also work well as you are more likely to be motivated to start with and feel happy that you are spending less so that you can save a bit more. Once you have spent less for a while, you might start to want to treat yourself to a few more things or feel that you have saved enough for a while. It can be wise to always save some money though, but you could alter the amount so that you are saving a bit less and therefore have more available for other things.  Stay flexible and change it to suit your needs as they change.