How Much of Your Paycheck Should You Save?

Ever feel like your paycheck is gone before you even get to enjoy it? One minute it hits your account, and the next—it’s all bills, groceries and those “surprise” expenses that seem to pop up out of nowhere. It’s easy to wonder if saving money is even doable.

But here’s the deal: Finding margin to set aside money from each paycheck is the key to feeling financially secure and hitting your goals.

So, how much should you be saving? While people love to throw around the 20% savings rule, how much you should save per paycheck really depends on your current financial situation and your lifestyle.

Whether you’re working toward an emergency fund or saving for retirement, I’m going to help you figure out the amount you should save per paycheck. Plus, I’ve got some ways to start saving right now. Let’s get into it!

How Much of My Paycheck Should I Save? 

There’s no one-size-fits-all number for how much of your paycheck you should save. A lot of money experts swear up and down that you should save 20% of your paycheck each month no matter what. But it actually has far more to do with where you are in your financial journey.

Maybe you’ve heard of the 50/30/20 rule, where you divide your money into three categories: needs (50%), wants (30%) and savings (20%). Okay, sure—that could be a great savings goal. But are those percentages even realistic?

First of all, if you’ve got debt, you probably shouldn’t be spending 30% of your income on wants. Or if you’re saving for a down payment on a house, you might need to save more than 20%.

The 50/30/20 rule and similar savings methods sound helpful, but they ultimately fall short. They don’t account for your specific financial situation.

So, now that we’ve ruled that out, let’s talk about how to determine the right amount for you to save.

Figure Out How Much to Save per Paycheck

1. Know your Baby Step.

How much of your paycheck you should save mostly depends on your Baby Step. Don’t worry—if you’ve never heard of the Baby Steps, I’m about to lay them out for you.

Baby Step 1: Save $1,000 for your starter emergency fund.
Baby Step 2: Pay off all debt (except the house) using the debt snowball.
Baby Step 3: Save 3–6 months of expenses in a fully funded emergency fund.
Baby Step 4: Invest 15% of your household income in retirement.
Baby Step 5: Save for your children’s college fund.
Baby Step 6: Pay off your home early.
Baby Step 7: Build wealth and give.

The 7 Baby Steps are the proven plan to help you win with money. Because when you focus on one goal at a time and do it in the right order, you’re more likely to make progress.

And this works! My husband, Sam, and I followed these steps. Not only did we pay off $460,000 in consumer debt, but we also became Baby Steps Millionaires!

How Much to Save in Each Baby Step

• Baby Step 1: Your goal is to save up $1,000 as fast as you possibly can. And most folks are able to stack up the full $1,000 in 30 days (more on how to do that in a bit). It’s enough to deal with most small emergencies so you can quickly move to the next Baby Step. Having only $1,000 truly helps you figure out if a situation is an emergency, something that can wait, or something you can solve at a lower cost.

• Baby Step 2: In this step, you don’t save money from your paycheck. Instead, every extra dollar of your paycheck goes toward getting you out of debt. And in order to do that, you need to take your savings down to that $1,000 we just talked about and toss any extra money you’ve saved up at your debt. Ouch. I know. But trust me, this is how you make progress!
  
  Now, there are times when you may need to pause your debt payoff to save money for a specific life situation. For example, if you’re dealing with a crisis (job loss, medical emergency, etc.) or you’ve got a baby on the way, you want to stash up as much cash as you can. I call this “storm mode” or “stork mode.” Just make sure you get back on track when you can!
   
• Baby Step 3: Once you’re debt-free, your goal is to save up 3–6 months of basic expenses for a fully funded emergency fund. This is where you get to really put the pedal to the metal and flex those savings muscles, because you have no debt payments holding you back!
  
  And if you want to save for a down payment on a house, a great time to do that is in what we call Baby Step 3b. Just be sure you’ve got your full emergency fund first!
   
• Baby Step 4: This is where your savings habit gets a bit of a makeover. You get to switch it up and start investing 15% of your income to save for retirement. It’s all about taking advantage of a beautiful little thing called compound growth.
   
• Baby Step 5: If you’ve got kids, this is when you’ll focus on saving for their college funds. Notice how this step is after you start saving for retirement. That’s because your kids may or may not go to college, but you will retire. Again, when you save is just as important as how much you save—the Baby Steps are in order for a reason!
   
• Baby Step 6: This may not seem like typical savings, but paying on your home is like a forced savings account. With each payment, you’re building equity, and that will turn into real money in your pocket when it comes time to sell.
   
• Baby Step 7: Now this is where things get really fun! When you have zero payments, you can build some serious wealth and save up for whatever you want. And the best part? You can use that savings to give generously to others!

2. Set your specific savings goal.

Okay, so now you know your Baby Step and the general idea of how much to save (or how much to use to pay off debt in the case of Baby Step 2). But you still need to set a specific savings goal to go after. Because an “I’m just trying to save some money” attitude isn’t going to cut it.

Start budgeting with EveryDollar today!

So, do you need to save that $1,000 for your starter emergency fund? Maybe you’re only $500 away. Or maybe you’re saving $30,000 for a down payment on a house or $5,000 for a family vacation. Do you want to retire with a certain amount? Whatever your goal, nail down the exact number you’re going after and how soon you want to make it happen.

Your savings goals should be:

• Specific
• Measurable
• Tied to a deadline
• Written down somewhere
• Your own goals, not your mama’s (at the end of the day, the stronger the why, the stronger the try)
• Not a secret (because life-change rarely happens in secret, and you need the right people providing accountability and encouragement to make real change)

3. Calculate how much to save per paycheck.

Once you’ve set your savings goal, it’s time to break that down and figure out how much to save per paycheck. First, decide how much you need to save per month. For example, if your goal is to save $12,000 for your full emergency fund and you want to get that done in six months, you’d need to save $2,000 a month.

Next, consider how often you get a paycheck. Do you get paid monthly? Weekly? Biweekly? Divide your monthly savings goal by how many paychecks you get, and that’s how much you need to set aside every paycheck. In this case, if you get paid twice a month, you’d save $1,000 per paycheck.

Your Savings Goal ÷ Months Until Your Goal ÷ Paychecks per Month = How Much to Save per Paycheck

Where to Put Your Savings

For Baby Step 1, stash that $1,000 in a plain ol’ savings account—nothing fancy, just a safe place to park it while you get rolling. Then, when you hit Baby Step 3, go ahead and move that money into a high-yield savings account so it can work a little harder for you.

But listen, this isn’t about making bank on interest—you just need your emergency fund in a spot that’s easy to grab when life throws a curveball but not so easy that you're tempted to dip into it every time you scroll past a flash sale.

And when it comes to saving for things outside your emergency fund—like vacations, car repairs or even Christmas gifts—sinking funds are the way to go. Keep them separate from your checking and your emergency savings so you’re not accidentally robbing your future plans. Trust me, having money set aside for those big expenses will make you feel like a total boss when it’s time to pay!

Ways to Save More per Paycheck

So, how do you actually hit your savings goal? It might feel impossible right now—especially if you’re living paycheck to paycheck and just barely scraping by each month. But there are things you can do to find extra money!

Here are some ways to save more of your paycheck each month:

Get on a Budget

I get it. So many of us struggle with saving. I used to have a very hard time with it. But what I can tell you is that getting on a budget is the key to breaking the paycheck-to-paycheck cycle. A budget has taught me how to make a plan for every single dollar—including the dollars I want to save.

A budget is just a plan for your money—plain and simple. You’ve got to tell your paycheck where to go every single month. Otherwise, it’ll disappear before you know it. So, if you’re not already, make this the month you start budgeting.

Cut Expenses

A big way to increase your savings is to decrease your spending. This is when having a budget comes in clutch because it lets you see exactly what you’re spending your money on every month.

So, go through your budget—line by line—and see where you can cut spending. Is all your money going to UberEats and restaurants? Start meal planning and cooking at home. Maybe you need to lower your entertainment budget and cancel a few of those streaming services, or maybe you just need to slow your roll with Amazon by temporarily deleting the app.

Ditch Your Debt

One reason you may feel like you can’t save money is because a huge chunk of your paycheck is going toward debt payments. That’s the thing about debt—it steals your income. It’s why paying off your debt is Baby Step 2. You can’t make progress with your savings until you get debt out of your life.

The best way to knock out your debt is with the debt snowball method. Here’s how it works: Start by listing all your debts from smallest to largest balance. Make minimum payments on everything but the smallest debt—that’s the one you throw any extra money at until it’s gone. Then, use what you were paying on that debt to attack the next-smallest debt.

The debt snowball creates unstoppable momentum to help you pay off your debt faster than you ever thought possible! It worked for me, and I know it can work for you.

Increase Your Income

When you need some extra cash, one of the best things to do is get to work. Whether it’s a side hustle, part-time job or even switching careers, see what you can do to give your savings that extra push.

Retail stores always need cashiers, and you can even make your own schedule working for Uber, Lyft or DoorDash. But don’t sleep on offering your own services. Folks will pay a lot for personal services—like babysitting, lawn care, house cleaning and pet care. And there are even higher-paying jobs that don’t require a degree. Wouldn’t it be awesome if you could put an entire paycheck straight into savings?

Adjust Your Tax Withholdings

I know you probably think getting a large tax refund is a good thing. But technically, it just means you overestimated your tax withholdings and paid too much. You let the government borrow your money interest-free for the year. Absolutely not. That’s your money, and it’s time to take it back!

You can actually calculate your tax withholdings to better estimate how much to deduct from your paycheck for taxes. That way, you get to keep more of your income every month. Just be sure you put that extra toward your savings goal.

Start Saving With a Budget!

Here’s the thing—you can figure out how much you should save, but if you don’t actually have a plan for your money, you won’t get very far. That means you need a budget!

And lucky for you, I know just the free budgeting tool you need: EveryDollar. In fact, the average EveryDollar user finds an extra $395 in their first month of budgeting and cuts their expenses by 9%. Now that’s a nice boost to your savings!

Download EveryDollar today so you’ll be able to put more of your paycheck toward your savings goals—one monthly budget at a time.