How Much of My Paycheck Should I Save?

If you're searching "how much of my paycheck should I save," you probably want a straight answer. So here it is: aim for at least 20% of your gross income. But that number means nothing if it doesn't fit your actual life. Let's break down where that benchmark comes from, how to adapt it, and what to do if 20% feels impossible right now.

The 50/30/20 Rule (and Why It's a Starting Point)

The 50/30/20 rule is the most popular budgeting framework for a reason — it's simple:

50% toward needs — rent, utilities, groceries, insurance, minimum debt payments
30% toward wants — dining out, subscriptions, travel, the stuff that makes life enjoyable
20% toward savings and extra debt repayment — emergency fund, retirement, investments

It's a solid starting point, but that's all it is. If you live in a high cost-of-living city, your needs might eat 60%+ of your paycheck before you even think about saving. If you're debt-free and earning well, you might be able to push savings to 30% or more.

The point isn't to follow the rule perfectly. The point is to have a system that gives every dollar a job.

How Much Should You Save if You're Just Starting Out?

If you've never saved consistently, don't try to go from 0% to 20% overnight. That's how people burn out and quit.

Start with 10%. Or even 5%. The goal at this stage is building the habit, not hitting a magic number. Set up an automatic transfer from checking to savings on payday so the money moves before you can spend it.

Here's a simple ramp-up plan:

Months 1–3: Save 5% of each paycheck
Months 4–6: Bump it to 10%
Months 7–12: Push toward 15–20%

Every time you get a raise, increase your savings rate first. If your paycheck goes up by $200/month, redirect at least half of it to savings before lifestyle creep kicks in.

What If You Can't Save 20%?

Then save what you can. Seriously. Something is always better than nothing.

If you're living paycheck to paycheck, even $25 per pay period adds up to $650 a year. That's a car repair that doesn't go on a credit card. That's the difference between a setback and a spiral.

A few ways to find money to save when the budget feels maxed:

Audit your subscriptions — most people have $50–$100/month in stuff they forgot they're paying for
Negotiate one bill (insurance, phone, internet) — a single call can free up $20–$50/month
Redirect windfalls — tax refunds, bonuses, and cash gifts are the easiest money to save because you weren't counting on it

If you're also dealing with debt, you don't have to choose one or the other. We break that decision down in our post on whether to pay off debt or save first.

Where Should Your Savings Actually Go?

Not all savings belong in the same place. Where your money goes depends on what it's for:

Emergency fund (3–6 months of expenses): High-yield savings account. You need this accessible but separate from your daily checking so you're not tempted to dip into it. Aim for a HYSA paying 4%+ APY. Not sure which accounts you need? Here are the 3 accounts everyone should have open.
Short-term goals (1–3 years): Also a high-yield savings account or a CD. Think vacations, a car down payment, or a wedding fund.
Retirement: 401(k) or IRA. If your employer matches 401(k) contributions, that's free money — contribute at least enough to get the full match. This is arguably the highest-return savings move you can make.
Long-term investing (5+ years): Brokerage account with low-cost index funds. This is where wealth building actually happens over time. If you're not sure how saving and investing differ, this post breaks down the distinction.

Priority order if you're starting from zero: employer 401(k) match > starter emergency fund ($1,000–$2,000) > high-interest debt payoff > full emergency fund > max out retirement accounts > taxable investing.

The Bottom Line

The "right" savings rate is the one you'll actually stick to. Twenty percent is a strong target, but 5% consistently beats 20% that you abandon after two months. Automate it, increase it over time, and stop comparing your Chapter 1 to someone else's Chapter 10.

The most important step is the first one. Pick a number, set up the transfer, and start today.

Want the full breakdown? Download our free Budget Blueprint to build a budget that actually works.