You likely already know you should be saving money every month. Whatever your income level or job industry, saving money for future needs is essential to maintaining financial stability. But how much should you save each month? Well, that depends.

The short answer is that you should save as much as you can afford to set aside. The long answer is that the right amount to save is unique to you and includes factors such as your financial goals, how much you earn and how much you spend each month on essential expenses.

How Much You Should Aim to Save Each Month

Kenyans on average have been saving between 7% and 8% of their monthly income in recent years, but that doesn’t mean that percentage is right for you. As noted above, your savings target will depend on your particular financial profile. Your savings goal could be more or less than the national average once you calculate those numbers.

For instance, you may find that your monthly budget doesn’t allow for 7% savings and that you have to aim for saving 2% of your income instead. That’s not a problem. The important thing is to establish a savings habit. You can always increase your monthly goal as you pay down debt or earn more money.

One thing to consider is what you’re saving for. Rather than thinking of your savings as a lump sum that sits in a bank or investment account, it can help to save with specific goals in mind. For example, you might want to save for a house, a wedding or a general rainy day fund. In each case, you’ll likely have a specific amount of money you need to save to achieve these goals, and figuring that out ahead of time can help you determine how much to save each month.

You may also be thinking about retirement and whether you’ll have enough money to live on when you leave the workforce. Experts offer a few different takes on how far along your retirement savings should be at different points in your life. One view says that by age 30, you should have set aside the equivalent of one year’s salary in retirement savings. Others take a less aggressive approach and suggest saving half your annual income in a retirement account by age 30.

But no matter where you are with your retirement savings, it’s never too late to start. What matters is that you create a savings plan that works for you and that you can maintain month to month.

Why You Need an Emergency Fund

An emergency fund is there for life’s unexpected events. If you suddenly lose your job, it helps to have a few months’ worth of expenses covered in a savings account so you don’t have to worry about your ability to pay your bills while you look for work. If you get sick, an emergency savings fund can help you cover out-of-pocket expenses without taking on debt. If your car’s transmission dies and you have to replace it, having an emergency fund could make that situation a bit less painful.

Your emergency fund can give you the space to think through a difficult financial situation and make smart long-term decisions, since you’ll be less panicked about how to afford a given expense.

The rule of thumb with emergency funds is to set enough aside to cover three to six months of expenses. You can build the emergency fund over time by putting a portion of your income into it each month.

You can calculate your emergency fund goal by adding up all of your essential monthly expenses, including:

• Rent or mortgage payments
• Utilities payments
• Groceries
• Gas or public transportation expenses
• Monthly minimum debt payments

Be sure to add any other essentials you pay for on a recurring basis, such as medical prescriptions or other non-negotiables, like your car registration. Once you’ve tallied those costs, multiply them by three or six to get your emergency savings target.

Again, try not to be discouraged by the total number. Work toward your overall goal incrementally rather than stressing about fully funding it right away. If you come into a sudden windfall, such as a bonus or big commission at work, consider putting that into your emergency fund to speed up the funding process. When you withdraw money for emergency expenses, make a plan to replenish the fund once your finances are stable again.

How Budgeting Can Help You Save Every Month

One of the best steps you can take toward building your savings is to create a budget. Budgets can help you live within your means and make it easier to stay disciplined in making contributions to long-term goals. Putting a budget down on paper lets you see how much money you’re bringing in, how much is going out and what kind of progress you’re making on your savings.

When you list your monthly expenses, you might be surprised by the amount you’re spending and the things you’re spending your money on. Perhaps you’re being charged for a recurring subscription or streaming service you don’t use often. Maybe you spend more on groceries every month than you realized. Spotting these types of costs can make it easy to trim your budget and free up extra cash to put into savings.

The good news is, budgeting can be quite simple. There are many ways to budget, and you can track expenses in an app, spreadsheet or on a plain old piece of paper. Here’s how to get started:

1. Figure out your monthly income. This includes your regular paycheck and any side gig income.
2. Add up your expenses. List everything you buy or pay for in a month, including rent, groceries, movies, games, bills, medicines—anything that comes up regularly.
3. Set savings goals. Look at how much you have left over after your expenses and see how you could set that aside for savings goals. Decide how much to put toward each savings category, and set it aside. If you don’t think you’ll be able to reach your goals, or you don’t have any money left over, look at reducing your expenses or increasing your income.
4. Track your expenses and check your budget each month. Setting a budget is one thing, but it won’t do you much good unless you stick to it. If you exceed your budget limits, adjust your spending or reassess your goals to make sure they’re realistic. Also review your savings deposits and see whether you hit your goals. If need be, adjust your budget for the next four weeks, cutting unnecessary categories and putting more money toward debts or savings.

If you’re looking for a framework to get started, you might consider budgeting using the 50/30/20 method. Here’s what it looks like:

• 50% of your income is set aside for essential expenses, such as rent or mortgage, utilities, groceries and debt payments.
• 30% goes to discretionary expenses, such as take-away meals, streaming subscriptions and other entertainment.
• 20% goes to your debt payments and savings for things like buying a home, retirement and building your emergency fund.

You can adjust the formula to suit your budget and your financial priorities. If you want to pay down high-interest credit card debt or student loans faster, you might cut down on entertainment spending to set more than 20% of your income aside for that. Or, you might not put as much into savings. It will take you longer to reach your goals, but you’ll likely save money on interest by paying down your debts as quickly as possible.

Ways to Save Every Month

There are a number of ways you can save money each month, even if you’re just getting started with budgeting.

1. Skip takeout. Cooking meals at home costs less than ordering from restaurants, and it can be just as enjoyable. Cooking at home also reduces the chance that perishable groceries, such as fruits and vegetables, will go bad before you use them so you’re less likely to have wasted money on those items.
2. Consolidate your credit card debt. If you have several high-interest credit cards, your balances could be growing rapidly. Consolidating all of your credit card debt onto one lower-interest credit card or through a lower-interest personal loan allows you to pay off existing debt and focus on making one payment each month while also saving on interest.
3. Pay for everything with cash. You don’t need to close your credit card accounts—in fact, keeping them open can help your credit score if they help your credit utilization ratio and length of credit history. But paying for goods and services with cash or debit may make you more aware of how much you’re spending, since the money comes out of your checking account right away. There’s also a natural limitation built in because once you run out of cash, you have to stop spending. Just be sure you carefully monitor your balance to avoid an overdraft.
4. Buy secondhand. Purchasing clothes, shoes and even electronics secondhand can help you save a lot of money. If you search online marketplaces, you may even find seller ratings so you know whether the person you’re buying from is legitimate and that the products are likely to be good quality.
5. Negotiate your bills. If your monthly cable, internet or cell service bills are high, try calling your provider. They may be willing to offer you discounts or special packages that will give you a lower rate, decreasing your monthly expenses.

Shifting a few spending habits and seeking out deals may have a significant impact on your budget. As you find ways to free up more cash, you can adjust your savings targets to set more aside.

What Should You Do With Your Savings?

If you don’t yet have emergency savings, funding that account will likely be your highest priority. You might consider keeping your emergency fund in a high-yield savings account, which will allow you to earn interest on your balance. This can be a solid way to increase your savings simply by leaving money in the account as long as possible.

After you’ve established your emergency fund, you may want to focus on any outstanding high-interest debt. Allowing interest to accrue on your debts may cancel out your savings if you’re carrying high balances, so that is a good next step.

Big-picture savings goals to consider include saving for a down payment on a home or funding retirement accounts. Depending on the types of retirement accounts you open, you may be able to automatically have contributions withdrawn from your paycheck each month. You won’t have to remember to make the transfers yourself, but you’ll know that you are steadily moving toward your goals.

The Bottom Line

Developing a monthly savings habit is an act that builds on itself. Creating a budget and establishing an emergency fund provide a solid foundation for your financial life. From there, you’ll continue to find new ways to save for important milestones and expenses. And even if you can only save a small amount of money each month right now, you can increase your savings as you earn more and become more confident in your money management skills.

Good money management also helps you build good credit, which can help you save when opening new credit accounts to do things like buy a home or finance a car.