How much should I save each month?

What is a good amount to save a month?

There’s no one-size-fits-all answer. The right amount to save each month depends on your income, responsibilities, and what you’re saving for. A general piece of financial advice you’ll hear is to save around 20% of your take-home pay each month, but this goal isn’t always achievable, especially if your income isn’t increasing as quickly as the cost of living. If your rent is high, you’re paying off debt, or you have children, you might find it hard to save even 5% of your income each month.

Instead of focusing on a percentage, you may find it easier to work backwards from your goal. For example, if you want to save a £20,000 house deposit in five years, you’ll need to save £333 a month. If that feels out of reach, start with what you can afford and make a plan to build up over time. As a rough guide, the average amount saved per month is £226, with 50% of savers using a Cash ISA to hold their money. 

Perfect for you: How much should I have in savings?

Is saving £200 a month good?

Yes, saving £200 a month is a great achievement, especially if you’re paying a mortgage or renting from a private landlord at the same time. Over the course of one year, you’ll have saved £2,400 and over five years, that’s £12,000 - and that’s before adding interest. 

Put £200 a month in a savings account or Cash ISA with a competitive interest rate and you’ll reach your savings goals sooner. 

Aged 18 to 39 and saving for your first home? A Lifetime ISA lets you save up to £4,000 each tax year towards your first home or retirement. The government will top up your savings with a 25% bonus, so if you max out the account you could get a £1,000 top-up each year. 

Learn more: What is a Lifetime ISA?

What should you save for?

What you should save for depends on your priorities, but here are a few common savings goals:

💸 An emergency fund (try to work your way up to 3-6 months of essential expenses)

🏠 A deposit for your first home

🛫 A holiday or big life event like a wedding

🎓 Further education or retraining

👵 Retirement

Some of these goals are short-term, others are long-term, and it’s normal to work towards a few goals at the same time. The important thing is to know why you’re saving, so you can stay motivated and make informed choices about where to put your money.

Where should I put my savings each month?

It depends. The right saving account for you will depend on what you’re saving for, how much you can afford to put away, and whether you need easy access to your money or you’re happy to lock it away for a year or more. Here are some popular options:

Lifetime ISA: For first-time buyers or saving for retirement. You’ll get a 25% government bonus of up to £1,000 a year. Just be aware of the 25% LISA withdrawal penalty if you withdraw before age 60 for something other than an eligible property purchase.

Cash ISA: Save up to £20,000 a year tax-free. Some providers (like us) offer competitive, easy access rates, meaning you can dip into your savings if needed.

Easy access savings account: A good home for your emergency fund or short-term goals. Look for the highest interest rate you can find with the flexibility you need. Choose an easy-access Cash ISA to make the most of your ISA allowance.

Fixed-rate savings account: Lock your money away for a set period of time and you’ll get a guaranteed rate in return. Ideal if you’re saving for something more than a year away and don’t need instant access. To save tax-free, consider a fixed-rate Cash ISA.

Learn more: How to save for a house

Ways to increase your savings over time

If your savings aren’t growing as quickly as you’d like, here are some quick and easy ways to boost them:

• Pay yourself first: Set up a direct debit to your savings on payday so you’re not tempted to spend it.
• Round it up: Some banks let you round up transactions and save the spare change.
• Track your spending: Understanding where your money is going helps you find ways you could cut back, and help you stay on budget.
• Cut costs where it counts: Even shaving £10 off your bills each month adds up to £120 a year.
• Celebrate small wins: Every milestone matters, even if it’s £50 saved instead of £500. The habit is what counts! In the Tembo app, our Time To Save feature shows you exactly how long (or how little) it’ll take you to buy your dream home in your chosen location based on your contributions and progress so far.
• Two-player mode. Saving for your first home with a friend or partner? Download the Tembo app and make the most of our Team Up feature. Team Up lets you and your house-buying partner track your progress together.

Learn more: How we use behavioural science to help you save for a house faster

If you need even more encouragement, why not try a budgeting or saving challenge? Here are three of our favourites:

The 50/30/20 rule

The 50/30/20 rule is a popular budgeting method that helps you divide your income into three categories:

• 50% for needs: rent, utilities, groceries, travel
• 30% for wants: takeaways, nights out, subscriptions
• 20% for savings: towards your emergency fund, first home or future plans

It’s up to you how seriously you take the 50/30/20 rule. If your essential expenses, such as rent and travel costs, take up more than 50% of your budget, simply tweak your wants and savings accordingly. You could always put your own spin on the strategy, calling it ‘60/20/20’ or ‘65/25/10’, for example. It’s all about making it work for you!

Perfect for you: Best savings accounts in the UK

The ‘underconsumption’ TikTok trend

One of the more surprising savings trends doing the rounds on TikTok right now is ‘underconsumption’. It’s the opposite of what social media usually encourages - instead of showing people what you’ve bought, it’s about celebrating what you already have. 

Underconsumption isn’t about depriving yourself or never spending money. It’s about being more intentional and resisting the pressure to constantly upgrade or replace things you don’t actually need. This might involve swiping past fast fashion hauls, deleting apps that encourage you to spend, and resisting the urge to treat yourself every time you’ve had a bad day. We know how hard it is!

Learn more: What is the best option for saving for a house?

Schedule in some ‘no-spend days’

As the name suggests, no-spend days are days when you don’t spend money, but it’s up to you what counts and what doesn’t. For some people, a no-spend day is any day that they don’t spend money on non-essentials. So even if they pay their rent on Monday and their electricity bill on Tuesday, they’ll still count those as no-spend days if they didn’t buy any clothes or takeaways etc.

Other people only count days where no money leaves their bank account at all, so if they pay their council tax on the first of each month, this won’t ever count as a no-spend day, even if that’s the only transaction to leave their account that day.

It might help to think of no-spend days as a game, like closing your Activity rings on an Apple Watch or committing to a daily language challenge on Duolingo. How many days can you avoid spending money in a month? Can you beat your PB next month? Maybe you could do several no-spend days in a row? It’s so much easier to change your behaviour when you set yourself a challenge.

You could track your no-spend days on a calendar or transfer the money you would’ve spent into your savings account. Once you start to see your progress build up over time, you may find it even easier to stick to.