How much of my income should I save each month?
The 50/30/20 rule says 20% — but the right number depends on income, fixed costs and where you live. Here is a sensible tiered plan.
The general rule
50/30/20 recommends saving 20% of your take-home pay. That figure is a starting point from US personal-finance writing, and it is unrealistic for many households — especially in cities with high rents, or on minimum wage in MENA/West-Africa markets.
Tiered targets by income
- Minimum / low income: build a 1-month emergency fund first, then aim for 5–10% of net.
- Middle income: 10–20% split between emergency fund (3–6 months of needs) and long-term savings / investing.
- Higher income: 20–30%, including tax-advantaged accounts, retirement and diversified investments.
Frequently asked questions
Should I save before paying off debt?
First save a small starter emergency fund (≈1 month of needs), then pay down high-interest debt (above ~7–10%) before accelerating savings beyond that; below that rate, saving in parallel usually wins.
Where should I keep my savings?
Emergency savings: liquid, accessible account. Mid-term goals (1–3 years): high-yield savings / term deposits. Long-term (5+ years): diversified investments appropriate to your country and horizon.
Does a 1% difference matter?
Yes, over decades it compounds to tens of thousands of currency units. Automate the savings transfer on payday so you never have to decide.