How much should I be saving per month?

How much should you save per month?

Your laptop suddenly stopped working, and your new bike turned out to be a total loss. Unexpected setbacks like these can happen at any time, and having a well-stocked savings account can be a lifesaver. But just how much should you really be saving each month? After all, life is expensive enough as it is.

What should go into your savings account—and what shouldn’t?

As always, having a clear overview of your finances is key to success. In this blog, we’ll explain how much of your hard-earned money you should save and how much you can spend right away.

Keep your goal in mind

Before we dive into the world of numbers and finance, let’s talk about motivation, because saving only really works if you’re truly motivated. For many people, saving feels like dieting—it requires discipline, and it’s not always easy to stick to. Anyone who has ever considered dipping into their savings for an impulse purchase can recognise this feeling.

Our tip: outsmart yourself by keeping your savings goal in sight. Frame a picture of your dream vacation destination or talk to others who are saving for something too—it can be a great motivation boost. Research shows that setting financial goals makes it easier to stay focused and overcome dips in motivation when saving.

Step 1: Get out of debt

If you want to start saving, debt is a major obstacle. Do your best to pay it off first before working toward your savings goals. The reason is simple: interest on loans is usually higher than the interest you earn on your savings account. This is especially true in times of low interest rates, like we’ve seen in recent years.

If you have multiple loans, pay them off in the right order—start with the ones with the highest interest rates and work your way down. This way, you minimise the total amount you pay. Need help getting out of debt? There are plenty of resources online that offer advice and plans on becoming debt free as a business or individual.

Step 2: Build an emergency fund

It’s always wise to have some money set aside for unexpected expenses. In 2020, Dutch households saved more than ever before—€42 billion compared to €21 billion the year before, largely due to reduced spending during the COVID-19 crisis. But not everyone was able to save more. A Rabobank study from April revealed that 25% of Dutch people still don’t have an adequate financial buffer.

Thankfully, building a financial buffer is a top priority for many—four in ten savers surveyed by ABN Amro and Gfk are saving for emergencies. And it’s a smart move. Having a buffer means you won’t have to take out a costly loan if your washing machine breaks down or your car needs repairs.

But how much should you save per month?

The size of your emergency fund depends on your situation. If you have a partner, children, and a mortgage, you’ll need more reserves than someone living alone in a rental home. 

As a general rule, the Dutch government organisation Nibud (National Institute for Family Finance Information) advises saving at least 10% of your net monthly income for your emergency fund. For example, if you earn €3,100 net per month, you should aim to save at least €310 per month. Over a year, that adds up to €3,720, which can cover essential expenses like a washing machine replacement or emergency repairs.

A standard savings account is a good option for building your emergency fund. While it’s not meant for frequent transactions, you can always transfer money to your checking account when needed.

Use the right savings formula

Beyond an emergency fund, you likely have other long-term savings goals—whether it’s a new car, a world trip, or your child’s education. A great way to structure your savings is by using the 50-30-20 rule. This simple budgeting method helps you allocate your income effectively, making it easier to reach your financial goals.

Here’s how much you should save per month, based on the 50-30-20 rule:

Category 1 – 50% of your net income:

This covers all recurring expenses and fixed costs, such as rent or mortgage, insurance, transportation (fuel or a train pass), and groceries. Ideally, these costs should not exceed 50% of your monthly income.

Category 2 – 30% of your net income:

This is your budget for personal needs and leisure activities—movies, gaming, a weekend getaway, or dining out. Anything that makes life more enjoyable fits into this category.

Category 3 – 20% of your net income:

This portion is for saving and wealth building. Whether it’s for an emergency fund, a future investment, or paying off debt, this category ensures you’re securing your financial future.

Let’s consider an example:

If you earn €5,000 net per month, your budget breakdown would look like this:

• 50% for recurring expenses and fixed costs = €2,500 per month
• 30% for personal needs = €1,500 per month
• 20% for savings and wealth building = €1,000 per month

Saving €1,000 per month means that in a year, you’ll have €12,000 saved—and after five years, €60,000 (plus interest). To help manage your finances, we’ve created a household budget Excel sheet for NL residents. Adjust it to fit your needs and get a clear overview of your savings plan.

What if you want to build more wealth?

If you’re aiming for larger savings, keeping all your money in a savings account might not be the best option. With today’s low interest rates—and even negative interest rates for high balances at some banks—it’s worth considering alternatives.

Want to avoid negative interest rates? Our Peaks app can help. With Peaks, you can save and invest effortlessly—rounding up spare change from everyday purchases or setting aside larger amounts for the future. Whether you’re saving for your child, your dream trip, or long-term financial growth, Peaks makes it easy to invest wisely.

Start today, spread your risks, and watch your small savings grow into something big! 😊

Reminder: Investing involves risk, and you may lose (a portion of) your investment.