How Much to Start Saving?
Nov 27, 2024
Let’s face it—saving money sounds great in theory, but when your bills are piling up and payday feels like a breath of fresh air, it’s easy to push it aside. Maybe you think you don’t earn enough to save, or you’re waiting for the “right time” so you keep asking yourself how much do you need to start saving? The truth is, you don’t need a huge salary to start saving—you just need a plan.
Why Saving Matters (Even If You Think You Can’t Afford It)
According to a World Bank report, nearly 40% of adults globally don’t have any form of savings. Yet, life is unpredictable—emergencies happen, opportunities arise, and retirement sneaks up faster than you expect. Having savings gives you financial security, peace of mind, and freedom to make choices rather than living paycheck to paycheck.
So, how much do you really need to start saving? The answer depends on your income, lifestyle, and goals, but let’s break it down into something manageable.
The 3-Tier Saving Approach
1. Start Small: The Power of the First $1 (or Your Country’s Equivalent)
If you’re new to saving, just start with one dollar, euro, pound, or shilling—whatever your currency is. The biggest obstacle is getting started, so the amount doesn’t matter as much as the habit. According to behavioral finance studies, people who automatically transfer small amounts to savings accounts are more likely to continue saving long-term.
2. Build a Starter Emergency Fund ($500–$1,000)
A recent Global Financial Literacy Survey found that 56% of people worldwide couldn’t cover an unexpected $1,000 expense without going into debt. That’s why your first real savings goal should be at least $500 to $1,000 to handle minor emergencies like a car repair, medical bill, or a sudden job loss.
Can’t save that much at once? Start with $10 a week.
Use windfalls (bonuses, tax refunds, extra income) to boost your savings faster.
3. Aim for 3–6 Months of Living Expenses
Once you have your starter fund, build a fully-funded emergency savings account with 3–6 months’ worth of living expenses. The amount will vary based on your monthly costs, but here’s an estimate for different lifestyles:
Single in an urban area: $5,000–$10,000
Family with two kids: $15,000–$30,000
Freelancer or self-employed: Aim for 6–12 months of expenses since income is unpredictable
How to Start Saving (Even If You’re Broke)
Automate It – Set up an automatic transfer to a separate savings account, even if it’s just $5 per week.
Cut One Small Expense – Skipping one $3 coffee a day saves over $1,000 per year.
Use the 50/30/20 Rule – Allocate 50% of your income to needs, 30% to wants, and 20% to savings & debt repayment.
Increase Income Streams – Consider a side hustle or freelancing to boost savings.
Take Advantage of Employer Benefits – If your job offers a retirement plan with a match, contribute enough to get the full match—it’s free money!
Just Start Today!
No matter where you are financially, the best time to start saving is today. Even small steps will compound over time and give you the financial confidence you need. Whether you’re saving a dollar a day or setting aside 20% of your income, the key is consistency. Start small, dream big, and watch your savings grow!