How to save money each month

Working out how to save money each month can seriously increase your contributions to your savings goals. The hardest part? Getting started. Once you’ve found the money-saving tips and tricks that work for you, saving becomes a habit rather than a chore.

And nothing says “habit” quite like a monthly goal. Setting a target to achieve each month can give you the consistency necessary to build up a healthy savings account over time. Read on to discover the secrets to saving money each month, so you can start improving your financial health today.

How much money you should save each month depends on your lifestyle and expenses. A good target to aim for is 20% of your overall income, but you should feel empowered to start lower if that seems like too much of a stretch. Remember: Every little bit counts.

So, how do you know if a 20% savings target is too high or too low? It starts with assessing your current cash flow. Take some time to calculate your monthly income and expenditures — basically, the money coming in and the money going out of your bank account. Keep tabs on any expenses that predictably recur each month, such as your rent, and any that fluctuate based on your spending habits.  

Before we get into actual savings methods, let’s get something out of the way. Saving money doesn’t have to be painful. In fact, you probably should allow yourself a little wiggle room to enjoy yourself — within reason. If you’re too hard on yourself, you may develop an “all-or-nothing” mentality that ultimately undermines your savings goals.

With that in mind, let’s look at one saving and budgeting method that may help you reach that 20% savings target. It’s called the 50-30-20 rule.

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If you’re looking for an accessible, easy-to-remember budgeting tool, look no further than the 50-30-20 rule. Created by US Senator Elizabeth Warren when she was a law professor specializing in bankruptcy law, the 50-30-20 rule suggests breaking down your monthly expenditures according to the following rules:

• 50% of your gross income should go towards your needs, e.g., rent, utilities, debt repayments
• 30% should go towards your wants, e.g., eating out, gym subscriptions, holidays
• 20% should go towards your savings goals

Need help visualizing this budget? Use our 50/30/20 calculator or check a video that breaks it down:

According to the 50-30-20 rule, you should be saving 20% of your income each month. This is a nice, round number, but think of it more as a guideline than a rigid rule. 

Putting aside 20% a month can be a bit easier to manage if you have a regular, fixed income. Knowing how much money is coming in and going out can empower you to take advantage of one of the best savings tools of all: automatic deposits. If you set up an automatic deposit that sends 20% of your monthly income into a designated savings account, you won’t have to remind yourself to do it each month.

Another benefit of automating your savings? It prevents your money from sitting in your bank account until you manually transfer it into a savings account — thus reducing the likelihood you’ll spend it.

According to Eurostat, the average monthly net income of an EU citizen is €1473. If we apply this figure to the 50-30-20 rule, we get the following break down:

• €736 goes towards needs (i.e. 50% of the income)
• €441 goes towards wants (i.e. 30% of net income)
• €294 goes towards savings (i.e. 20% of net income)

According to these figures, if the majority of EU citizens followed the 50-30-20 rule, the average savings per month in Europe would be around €300, or roughly €3500 per year. For many, this would constitute a sizable emergency fund, or it would make a significant contribution towards paying off any outstanding debts.

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Now that you’ve got an idea of how much money you should aim to put away each month, here are some tips on how to do it. But remember: While doing all of the following would be an excellent way to start making some serious savings, trying to do too much too soon can be counterproductive. 

Instead, start by choosing the tips that seem most achievable. Then, once they become habitual, begin integrating other money-saving practices into your routine.

It may be frustrating to hear, but until you start paying off any outstanding debts, it will be difficult to start saving properly. However, if you use a method like the 50-30-20 budget and put 20% of your monthly income toward paying off your debts, you may be surprised how quickly you can get out of the red. 

Not only is this good for your bank balance, but it’s also great for your mind, as it will give you a greater sense of financial independence. 

Cutting back on your utility bills every month can free up quite a substantial amount of money. The biggest culprits are usually your electricity bill and gas bill. As a result, you should make it a habit to regularly compare different providers to see if you could take advantage of a better deal elsewhere. 

In addition, you should consider: 

• Switching to LED lightbulbs, as they use 90% less energy than the standard models
• Replacing any appliances that aren't energy-efficient
• Regularly monitoring your energy usage so you can spot areas where you could decrease your consumption
• Unplugging electrical devices instead of keeping them on standby

There are many ways to cut back on costs when grocery shopping. A good place to start is to create a weekly meal plan so that you know exactly which ingredients you need to buy before going to the store. By sticking to a strict shopping list, you’re more likely to stick to a stricter budget. 

Another great tip is to do some simple mental arithmetic as you shop. This means that every time you put something in your basket, you keep a tally of how much your shopping items are costing you. It’s worth using a calculator on your phone to help you with this. 

Yet, perhaps one of the best tips of all is to avoid going shopping when you’re hungry. Nothing will encourage you to stray from your grocery budget more than a hungry stomach, taunting you to stuff your basket full of pricey, pre-packaged snacks.

Reducing your phone bill each month can quickly add up to big savings. There are several ways you can go about doing this:

• Before buying the latest model, ask yourself whether it’s worth buying a new phone if your existing one still functions well
• When on the market for a new phone, pay for it up front rather than getting the price of the phone included in your monthly bill as phone companies often hike up the prices this way
• Be sure to shop around for different providers until you find the best deal
• Before committing to a contract that includes a host of features, honestly ask yourself whether you will use these features enough to justify the price you’ll pay for them

Many businesses make the majority of their money from subscriptions. Why? Because once people sign up for them, the thought of canceling seems too laborious. In reality, cancelling an unused subscription is usually simple and can save you a lot of money. Ask yourself the following questions when considering whether to continue paying for a subscription:

• How often are you using this subscription?
• Is there a cheaper alternative available?
• Would it significantly impact your life if you no longer had it?

If you find yourself answering that you don’t use the subscription that often, or that there are cheaper alternatives available, it’s probably time to cancel it.

If you need to purchase a new item, consider buying it secondhand. Without losing too much in quality, you can often get some brilliant deals while saving quite a bit of money. 

Whether you’re hunting for clothes in thrift stores or searching for specific items in online marketplaces such as eBay, you’ll need a keen eye to identify a real bargain. However, when you find one, the feeling of getting a good deal for your money can be priceless.

Many new savers fall into the “all-or-nothing” trap. If they don’t meet or exceed their monthly goal, they get discouraged and give up on saving entirely. It’s an experience shared by many who try to stick to an overly strict diet.

When you make your savings goals too ambitious, you set yourself up for failure. Once you inevitably fail to reach your monthly target, you’re unlikely to stick to your savings plan at all. This mindset is highly counter-productive, as even €1 saved per month is better than nothing! 

The trick is to find the sweet spot of making your savings goals challenging but not impossible. Think about your savings as a long-term investment in your future. Though there will be mishaps along the way, contributing something is always better than contributing nothing at all.

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If you’re serious about saving, our savings account has got you covered. Not only can you set yourself daily spending limits which help you stay within budget, but you’ll also receive push notifications each time a transaction takes place in your account.

Pair this with Spaces which allows you to create multiple sub-accounts with specific budgeting targets, and our Insights feature, which categorizes your spending habits, and you’ll be reaching your savings goals in no time!