How Much is Enough When You’re Saving Money?

Now that tax season is upon us, I’d like to ask you something: If you’re able to, do you currently have a plan for saving money? Whether or not you do, have you ever considered how much you should have in your savings account? There’s the 50/30/20 rule for budgeting as well as the 10% rule for retirement, but we’re not talking about methods for saving money. Instead of thinking how to save it, I want to get you thinking more about how much you should save.

Creating a Savings Goal

We all know that we should set some money aside every time we get paid. Sometimes, this seems impossible due to our cost of living. But even people who do have the money to start saving sometimes don’t. If you don’t already know how much your paycheck usually is, you should already know how much disposable income (money left over from your necessary expenses; a.k.a. spending money) you have from each check. Some people will tell you to try to make $1,000 your savings goal as well as the minimum to have in your account at all times. I agree with the first half of what people say about that: Make $1,000 your savings goal, but only if you don’t already have that.

Your own personal savings goal, as a minimum to have at all times, will be different from other people. As I previously insinuated, I don’t think $1,000 is a good minimum to have at all times in your savings account. Here’s why:

What will $1,000 get you if you were to lose your job? It doesn’t matter if you get severance. It doesn’t matter that it’s nearly tax season. Imagine that you just lost your job and you have nobody to turn to for help. If you’ve been diagnosed with anxiety like I have, the very thought will begin to stress you out. That’s because you know that just your rent or mortgage alone is more than half of $1,000, that is, if it’s even under $1,000.

Finding Your Autonomous Consumption

In macroeconomics, we talk about “autonomous consumption,” which is the amount of money the economy or government spends out of necessity. It is applicable, however, in microeconomics, to what an individual spends out of necessity. Almost everybody has a budget for rent or mortgage, phone, and insurance. It starts to be a little more personalized the more expenses you have. For example, not everybody has an auto loan or even the same phone plan.

A good place to start is to add up all of your consistent expenses. Here’s an example of expenses found in a monthly autonomous consumption:

  • Rent: $869
  • Auto Insurance: $88
  • Auto Loan: $232
  • Phone: $120
  • Student Loan Payment: $1,600
  • Total Autonomous Consumption: $2,909

The point of autonomous consumption is finding out how many expenses you have that are consistent and are always going to be owed in each month.

Add Your Necessities

Necessities are what I personally call the other expenses you have. What makes it different is that it varies rather than stays constant. People usually have additional expenses such as food, gas, and utilities. When you include them in your budget, you most likely take a mental average based on frequency. Here’s an example of what some people may budget for necessities each month:

  • Gas: $50
  • Food: $400
  • Utilities: $120
  • Total Necessity Consumption: $570

Don’t forget to be honest about your expenses and their amounts. You’re creating a goal to know how much you need to save, not a goal to see how much you can make in budget cuts. You should adjust your budget each month as needed.

How Much is Enough?

Total consumption in this example (autonomous plus necessities) is $3,479 per month. This is how much the person from the example should have in their savings account every month as a minimum. If they want to make sure that they and their family are taken care of in the event that they lose their job, it’s good to have at least one month of expenses in savings. Some people like to refer to this as a “rainy day fund.”

To find out how much is enough for you, personally, you should find out what your total consumption is, separating autonomous consumption from your varying necessities. Once you have that, you should find out how many months you want to be protected for. If you’re not sure how many months is good enough for yourself, a good place to start is to try and figure out how many months it took you to find a decent paying job.

If you ever do lose your job, I’m not saying that you shouldn’t take a lesser paying job in-between decent paying jobs. I’m saying that if it takes you three months to go from one decent paying job to the next, it would be a good idea to have three months of your expenses in savings so that you can take the lesser paying job with confidence and less stress. After all, you can put most of what you make in savings during those three months once you reach that goal.

Additional Expenses and Where They Go

Here’s a short list of extra expenses that you may or may not have and how you should categorize them.

Autonomous Consumption

  • Child Support
  • Bus Pass (count only in the months you purchase)
  • Cable or Satellite TV, Streaming Services (Netflix, Hulu, Amazon, etc.), and Internet
  • Prescribed Medications
  • College Tuition (count only in the months you purchase)
  • Rent or Mortgage Payment
  • Loan Payments
  • Debt Payments (repayment programs for credit cards, etc.)


  • Haircut and Other Salon Expenses (count only in the months you purchase)
  • Date Night Fund (as one married man to another married person, trust me)
  • Household Goods (toilet paper, shampoo, soap, paper towels, etc.)
  • Oil Changes and Other Car Expenses (count only in the months you purchase)
  • Credit Card Payment (only when not in collections or in repayment program; see above)


    1. Thanks! I’m currently not in a place where I can save like I’d like to either. Just recently, my wife and I paid off our phones and downgraded our plan. Now, with a student discount, we pay under $100 per month for unlimited talk, text, and 6 GB of data (slower after 6 GB). The bill used to be higher than that, but we used our tax refund (I’ve written about how to use that, too, if you’re interested).


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