How much should I save each month UK
In this brief blog we are going to answer the question How much should I save each month in the UK?
How much should I save each month (UK)?
The amount you should save each month should be at least 30% of your net salary. You should do this each month and most people you should have at least 3months worth of salary saved up but some people say 6 months.
Saving up 3 months or 6 months worth of salary at once is of course not so possible so don’t worry if you don’t have this saved up already, most people don’t. The good news is you now know what your ideal savings should be and you could either go with the 30% rule or maybe you could attempt to save more than 30% of your wage each month in order to hit your savings target.
How much should you save monthly?
Many sources recommend you should use the very popular 50/30/20 rule which states that you should save at least 20% of your income each month but here in the UK we advocate for you to save as much as 30% of your net income each month
Why do most people recommend you save 30% each month?
The reason why it is recommended that you save 30% each month is because if you lost your job it may take between 3 and 6 months to find a new job and having 3 to 6 months worth of savings means you could potentially take care of all your fixed costs for the foreseeable future whilst you begin job hunting.
Having 3 to 6 months worth of savings also means that you will be prepared in case of any financial emergency.
What if you are saving for a particular goal?
If you are saving for a particular goal then you may want to save a particular amount each month in order for you to get to your savings goal.
If you were saving for a mortgage deposit which was £12,000 and you wanted to buy your house in 12 months you would need to save at least £1,000 each month in order for you to achieve this savings goal.
How much does the average person save per month?
The average person may indeed not save any money. Data shows us that most people in the UK have no savings and couldn’t survive a financial emergency as they would have to obtain short term borrowing at much higher costs. It is advised to save a minim of 20% of your net income each month whilst a maximum of 50% of your net income can go towards committed expenses and 30% of your net income can go towards lifestyle expenses which you can live without. This is known as the 50/30/20 rule but we advocate for saving as much as you can and a minimum of 30% of your net income each month.
What percentage of your salary should you save UK?
In the UK you should look to save between 10% to 30% of your salary. As mentioned before most people recommend you save 20% of your salary but the UK is a much more expensive country than other countries. If you live in London then you may find that you can’t save any percentage of your salary due to the extremely high living costs.
To assist you with some particular saving goals the government has different initiatives, schemes and tax relief which encourage spending or allow you to achieve your saving targets.
E.g the personal saving allowance, the tax-free ISA wrappers or schemes which may be able to help you purchase a home such as the help to buy equity loan scheme, the help to save scheme, the life time ISA and the help to buy ISA.
If you are saving for your retirement then you may want to consider what sort of pension pot you open and how much you contribute to it each month in the UK.
Saving a percentage of your salary each month in the UK is very important. It ensures you can cater to any financial emergencies or deal with the loss of your job.
What is a good amount to have in savings?
Most experts say a good amount to have in your savings is about 3 to 6 months worth of salary. This means you will have enough money to deal with any financial emergencies or be able to cover your monthly expenses for at least 3 months if you lose your job.
How much savings does the average 30 year old have?
Depending on what country the average 30 year old may have between £300 and £25,000 in savings and investments.
How much should a 25 year old have saved?
As a 25 year old you should really have saved at least 50% of your annual expenses. This means if you spend £50,000 a year on your annual expenses then by the age of 25 you should have saved at least £25,000. Your long term goal will then be to save at least 20 x your annual expenses so you can retire comfortably.
How much should I have saved by 40?
By the age of 40, you should have saved at least 3 times your annual salary so you are able to live comfortably and have a lot of money to contribute towards your future retirement.
Research by J.P. Morgan states that at the age of 45 you should have 3.4 times your salary stored away.
How much does the average 50 year old have saved?
The average 50 year old should have at least 40%of their retirement pot saved away. If you plan to retire with £500,000 then by the age of 50 you should have at least £100,000 of this saved away.
If you are saving for a home
If you are saving to buy a home then you should be aware that there are various government schemes which may make it more feasible for you to get on the property ladder quicker.
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire- same as above.
In this brief blog, we tried to answer the question of how much should I save each month. Our research on this topic led us to believe that the amount you should save each month was totally dependent on what country you were living in but as a general rule of thumb saving 30% of your net income each month was a good idea.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.