How Do I Budget My Monthly Income to Save More?

It’s never too late to create a monthly budget that works with your lifestyle.

5 min read

Trying to budget your monthly income can be a frustrating process at first. How much should you save? How much can you actually spend? And how do you prepare for unexpected expenses?

Every person’s process of saving money looks a little different. If you haven’t developed a regular savings habit yet, that’s okay. It’s never too late to start working toward one, and N26 is here to help you get started. Below we break down how to create a monthly budget that works with your income and your goals.

Everyone budgets differently, but many financial experts advise starting with the 50/30/20 rule of thumb. It divides your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment:

  • 50% for needs: Expenses that you can’t avoid, such as housing, groceries, transportation, basic utilities, insurance, minimum loan payments, and anything else that must be paid so that you can work (like child care).

  • 30% for wants: Extras that make life more enjoyable but aren’t essential, such as vacations, entertainment, monthly subscriptions, and eating at restaurants.

  • 20% for savings: Money that you set aside for your future self in a savings account, emergency fund, or investment account (like a 401K or IRA). This category also includes any debt repayment in addition to the minimum amount required.

 Example #1: If you receive a paycheck for $2,300 twice per month, you’ll want to save $920 per month (that’s 20% of $4,600). You’ll also have $2,300 for needs and $1,380 for wants.

Example #2: You make $19 per hour and work 40 hours per week, which is about 160 hours per month. Your monthly income is $3,040, so you would set aside $608 for savings, $1,520 for needs, and $912 for wants.

Keep in mind that this method might not be ideal for your particular situation, and that’s okay because every person’s circumstances are different. What matters is taking the first step towards building strong financial habits. 

Try setting aside a few dollars from every paycheck to put into your savings. If you have an N26 account, get in the habit of dropping a set sum into your Spaces when you get paid. Overtime, your savings will grow, and you can work your way up gradually from there to contribute more as it makes sense. Don’t forget to pat yourself on the back along the way too.

As soon as possible, even if you can only afford to save $10 or $20 a week. The sooner you start to save, the greater the rewards will be. That’s because of the “snowball effect” known as compound interest. Because of compound interest, your balance builds on itself and increases exponentially as time goes by. And the earlier you begin saving, the bigger that snowball grows.

You’re already on track, because you’re being proactive about saving money, and that’s the most important thing that you can do for your financial future.

Because saving money doesn’t just happen. You have to prioritize it, plan for it, and prepare for unexpected expenses:

  1. Build an emergency fund so you’ll have a financial cushion for the surprise expenses that life will undoubtedly throw your way: your car breaks down, your dog gets sick, or you’re forced out of work due to a global pandemic. Your emergency fund should ideally have enough money to cover three to six months of living expenses.

  2. Break big savings goals into smaller steps. Saving $20,000 in five years for a down payment on a house may seem intimidating, so break it down. Saving $77 per week sounds a lot more doable—and it’s the exact same thing.

  3. Reward yourself for reaching milestones. Plan treats along the way to celebrate when you’ve saved $1,000, then $5,000, then $10,000, and more milestones. Make sure these milestones make sense to your specific situation.

  4. Envision your goals to remember what you’re saving for. Create a reminder that you can see every day, like a picture of your dream home, or a vacation destination.

  5. When you slip, don’t beat yourself up about it—just get back on track. Everybody makes mistakes and falls short of their goals from time to time. What’s important is that you get back up again as soon as you’re able to.


Stay on top of your game with the help of the N26 mobile app, which is designed around your unique financial needs.

  • Visualize your short-term and long-term goals with Spaces. Create personalized sub-accounts, set savings targets, and instantly transfer money as often as you want. Spaces is also great if you have trouble following the 50/30/20 rule, because it lets you put money aside at your own pace. 

  • See exactly where your money is going. The N26 app automatically categorizes your purchases so that you can see your spending habits at a glance.

  • Enjoy early payday. Receive your paycheck up to 2 days early¹ when you add direct deposit to your N26 account. 

  • Feel empowered to budget and save with helpful tips and information on the N26 blog about everything from 401Ks to managing your student loan payments.

Get on track, stay on track, and discover tools that make saving money easier with the N26 app. Learn more about N26 and enjoy banking designed to help you achieve your goals, and empower you to build a stronger financial future.

¹ Faster funding claim is based on a comparison of our policy of making funds available upon receipt of payment instruction versus the typical banking practice of posting funds at settlement. Fraud prevention restrictions may delay availability of funds with or without notice. Early availability of funds requires payor’s support of direct deposit and is subject to the timing of payor’s payment instruction.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

By N26

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