How Much Of Your Paycheck Should You Save?

May 13, 2014

Want to know how much of your paycheck to save? I tell you how to figure it out in this stress-free saving guide!

Figuring out how much of each paycheck you should save is akin to that troublesome question we all dread about figuring out what receipts we should save for tax season- it’s just a loathsome topic!

Before I get on my frugal soapbox, let’s start with a deep breath and a pearl of wisdom:

No matter how from each paycheck “should be” saving, you still need to save as much as you personally can for your situation, even if it’s only a few bucks a month at first.

When I graduated with my Master’s Degree the first year was rough.  Most new graduates deal with the trifecta of paying off student loans, not finding a job right away or not finding one that pays well enough, plus the costs of starting off (sometimes in a new city, or needing new clothes or a car for the job they do get.)  Honestly, it could be difficult to save and I had to move home for a bit until I could get on my feet financially, much less, start putting away part of my paychecks to save.

On average, you should put away a minimum of 20-25% of your income into savings.

About 9 months after graduation, I was able to get a full time job (this was after I had been holding down freelancing gigs during the job search simply to cover my tush each month.)    For the first few months, due to high startup costs of setting up a new home and a long daily commute to my job, I wasn’t able to save a lot of money- sometimes I was only able to put away 5% or maybe $50 or $100 bucks here and there.  That’s OK.

Chances are, if you’re struggling to make that 20% mark when it comes to saving part of your paycheck for a rainy day, forgive yourself for not being able to hit that financial goal. I do though, want to offer a word of caution- if you find you aren’t able to save 20% of your take home pay in a savings account, you have to be very critical in understanding if the cash situation is based on actual need or simply the result of lifestyle inflation.

As stated, startup costs of a new job might be high- if you had to buy new clothes, a car, or relocate, you may be living paycheck to paycheck for quite awhile, truly unable to hit your 20% savings goals.  During this time though, you still have to cut the fat and ensure that you aren’t biting off more than you can chew as more income starts coming in-  is your rent too expensive?  Did you buy a car that truly fits your budget?  Where there other ways to cut costs?

You should save 20% or more of your “regular” income just in case it stops being regular.

It’s easy for lifestyle expenses to start creeping up as you start getting regular income, but the point of saving 20% or more of each paycheck each month just in case that “regular income,” you’re relying on to afford your lifestyle is no longer “regular.”  At any time you could lose your job or an unexpected expense could change your life-  It can be joyful to finally know where your money is coming from for the first time in your life with a new job, but you also have to know where it’s going.


So, what’s the best way to calculate how much money from each paycheck you should save?

Take your take home pay and multiply it by .20 (20%)  to see the precise amount you should save from each paycheck to be automatically deducted on each payday into a savings account.


If you have debts that need to be repaid, you can factor this into the 20% of your net pay that needs to be put aside, but if you find that you aren’t able to husk away 20% of each and every paycheck to build your savings and pay down your debts, something needs to give. Sadly, it sucks to say, but you may need to scale back your fixed expenses (and yes, it sucks) or work on developing ways to save (with meal plans, money saving apps or creatively saving in mason jars).


As stated, you may not be able to save 20% all the time or right away (the job market still sucks!) but if you find that consistently you are frustratingly below the 20% savings goal and you have money coming in, you might need to adjust your spending and fixed expenses (like rent, subscriptions, and car expenses offer the most wiggle room).

How Much Of Your Paycheck Should You Save?  A Stress Free Guide To Saving More Of Your Money

Did you find this post helpful? I would love for you to Pin this post on Pinterest or share!

6 comments so far.

6 responses to “How Much Of Your Paycheck Should You Save?”

  1. lori says:

    didnt help me its not frugal. you call yourself frugal i think you can do better i dont find most posts not frugal and helpful, disapointed.

    • Shannyn says:

      Hi Lori, the point of frugality isn’t just to cut costs, it’s to save money and reach your financial goals and build a nest egg. I offer ways to cut costs on this blog, but also, what to do with all the money you’ve saved living frugally.

      I value your feedback, so stay tuned for more frugal tips!

  2. Nell says:

    I’m interested in how you came up with the figure of 20% of you income as a ‘must save’. Obviously that’s a decent amount to save, and a good target for most people. But why not 10% or even 30% or 40%? Personally I aim for 30%, but I’d like to bump that up to more this year. But I’d say for most people 10% is a good start, until you get used to saving regularly and can see the benefits of having a buffer.

    Just curious 🙂

    • Shannyn says:

      20% seems to be a good rule of thumb for everyone- for someone just starting, it’s a great number to stretch for. If you’re more experienced or have cut costs, you should still strive to hit a bare minimum of 20%.

      When it comes to budgeting, it’s helpful to divvy up costs. 50% to essentials (housing, food), 30% for variable lifestyle choices (pets, entertainment, gifts, travel, personal grooming) and 20% to long term savings/financial security. It’s just a way to take some of the overwhelm out of saving without feeling like you can’t have fun, ever. Hope that sheds light on my thought process!

      • Angelica says:

        Hi Shannyn,

        First I wanna say I absolutely love your blog, I tune in likes a daily show lol. (:I had a few questions for you, as someone who is always looking for alternative ways to diversify their savings. When you mention the 20%, are you also including 401Ks, stocks, CDs. or just an emergency fund. I was wondering this because I feel like I save 10% in my savings accounts, but I also save another 10% in retirement and maybe 2% in my company stock purchase plan.
        Just wondering what you thoughts are on this…?

        • Shannyn says:

          Hi Angelica! Great question! I recommend putting at least 10% away in a savings account (liquid so you can get it in a pinch) and if you’re already maxing out your other options (like contributing to a Roth IRA or 401k plan) then just tack on that extra 10% for liquid savings until you have an emergency fund you can depend on. total, you can divvy it up between “liquid” and “untouchable” savings, especially if you’re just starting out, but you ultimately need to weigh how much cash you have set aside that you’d need in a pinch- in total though, the goal is to save 20% off your income for liquid savings, you never know what you’ll need it for- an emergency, a car, a wedding..etc. 🙂

          Hope that helps!


Get Updates Via Email

Join The Frugal Beautiful Update List!
Get Posts Sent To Your Inbox...subscribe below!