Many people don’t know how much money of their take-home pay they should save each month. 40% of Americans don’t have even $400 in savings to pay for a surprise financial emergency.

Not only should you be saving enough each month to cover an unexpected hit to your wallet, but you should be saving enough to feel financially secure. Here’s a guide on how much to save each month to get ahead.

The 50/30/20 Rule

Most financial advisors recommend following the 50/30/20 rule. This means dividing up your take-home pay so that 50% of it is being spent on necessities and 30% on non-discretionary expenses that you want, but don’t necessarily need.

The remaining 20% should go into a savings account. To confirm if you can save 20% every month, you need to figure out your monthly cost-of-living.

Determine Your Monthly Cost-Of-Living

Add up all of your monthly expenses starting with the biggest financial obligations including your rent or mortgage payment, home insurance, utilities, credit card debt, and groceries. Don’t forget to include anything and everything you purchase such as spa treatments, clothing, restaurant meals, and your morning cup of latte.

You should divide your expenses into two categories: those that are non-negotiable and must get paid every month, and those that are luxuries you could live without if need be. How many of the non-discretionary purchases could you cut out to save additional money?

Remember that you want to be subtracting these expenses from your take-home pay, which is your pay after taxes, health insurance, and other deductions have been taken out. A site such as will show you where to locate your before tax and take-home pay on your paycheck stub.

You should also have enough savings to see you through at least six months of unemployment should you lose your job. During an unstable economy, it doesn’t hurt to have more than six months of emergency money saved.

What If I Can’t Save 20%?

Socking away some kind of savings regularly is better than saving nothing at all. If you can’t save at least 20% of your take-home pay, then start with 10%. The rule is different for everyone depending upon your income, cost of living in your area, and financial obligations.

You also shouldn’t restrict yourself to the point where you never enjoy a purchase for yourself. It just means cutting back on certain expenses until you receive a pay raise or get a better paying job. You may also need to get a second job or a freelancing gig to help you pad your savings account.

Saving For a Retirement Plan

To complicate knowing how much to save, about 10% of your salary should be going towards a retirement plan. Many employers offer matching contributions on 401K plans. This is free money, so take advantage if your company offers this as a benefit.

If your employer offers a 401K or other retirement plan, you’ll see your contribution deducted in your pay stub before taxes.

Now You Know How Much To Save

Now you know how much to save to feel financially secure. Remember, however, that these rules are not one-size-fits-all. You may need to save more or less depending upon your personal situation.

Check out our latest money posts to discover more tips on making the most of your paycheck and savings.