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Monthly Saving Made Simple: How Much Should You Save?

July 31, 2023


Buying your home, buying your first car, ensuring your children get the best education, and having an adequate retirement corpus are some very common financial goals that nearly everyone aims to achieve. Planning and saving diligently can help you check off all these financial goals successfully.

However, before you get started, you may be confused about how much you should save. Knowing this can help you invest the necessary portion of your income in different investment schemes periodically. Some investment schemes and savings plans also offer life insurance coverage, providing security for you family.

So, let’s check out the finer details of the answer to a very fundamental question — How much should you save?

Savings as a Percentage of Your Income

The most common technique that people use to start saving up is to redirect a portion of their income to their savings. You can also begin your savings journey in this manner. If you do, the immediate question you need to answer is how much of your monthly income you should save. You can rely on various general rules and strategies to determine this percentage.

Here are some common solutions that may help.

  • The 50/30/20 rule:

    Here, you spend 50% of your income on essentials, 30% on discretionary spends and move the remaining 20% to savings.
  • The 80/20 rule:

    This rule suggests that you immediately save 20% of your income as soon as you earn it, and use the remaining 80% for various expenses and EMIs.
  • The 75/25 rule:

    As per this rule, you must save 25% of your income and use the remaining 75% to meet your expenses and pay off debts.

Keep in mind that these are merely benchmarks. You can always save more money than what these rules suggest, depending on how much of your income is disposable.

Savings for Emergencies

Another easy way to calculate the amount you need to save is to focus on building an emergency fund. Experts recommend having at least six months’ worth of income saved up for emergencies. So, in case there’s an unexpected medical illness in your family or if you lose your job temporarily, you have adequate funds to meet your family’s financial requirements without taking on additional debt.

For example, if you earn Rs. 50,000 a month, your emergency fund should amount to at least Rs. 3,00,000. You can choose different short-term investment schemes to build your emergency fund. The important thing is that these schemes must be quite liquid, so you can easily access the funds in case of an emergency.

Savings Based on Your Financial Goals

Apart from saving up for emergencies, you also need to save up to meet your various short-term, medium-term and long-term life goals. To achieve these targets, you need to ensure that your savings and investments are aligned with your financial goals. More specifically, you need to be mindful of 3 key aspects:

  • The tenure of the savings or investments must align with the time horizon of the goals
  • The returns that your savings offer should be enough to build the corpus necessary for the goals
  • The risk that you take on should not be more than the level of risk you can tolerate

Once you know the amount that you need to achieve a certain financial target, the time within which you need to achieve it and the amount of risk you can tolerate, you can use an online Investment Calculator to determine how much you need to save each month to achieve that goal. For example, if you want to build a corpus of Rs. 5 lakhs in 48 months by investing in a scheme at the rate of 9% per annum, you need to save around Rs. 8,600 per month.  


The fact of the matter is that the ideal amount of savings for your portfolio depends entirely on your financial goals. It is important to choose savings and investment schemes that align with the timelines of your financial targets. Furthermore, the risk-reward ratio should also be convenient for you, so you can achieve your goals without taking on more risk than you’re comfortable with.

Related Article

ARN -  ED/06/23/2541    

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.