How Much Should People Save From Each of Their Paychecks?

As a general rule, people should save at least 10 percent of each paycheck.

As a general rule, people should save at least 10 percent of each paycheck.

Paychecks must cover a wide array of expenses, and saving from paychecks may seem almost unrealistic to some wage earners. Still, financial consultants typically recommend that you save at least 10 percent of every paycheck for retirement alone, and most people should save much more. With a proper saving strategy, wage earners can prepare for retirement while also weathering unexpected expenses.

General Rule

As a general rule, you should stash away around 10 percent of each paycheck. This savings percentage serves as a general rule only, though, and can vary significantly from person to person. A wage earner who receives $5,000 per month, according to the financial website How to Save Money, should set aside between $500 and $1,000 per month. For workers on a bi-weekly pay cycle, this amount equates to about $250 to $500 per paycheck.

Other Savings

Though the 10 percent rule helps workers begin saving for retirement, setting aside only 10 percent of each paycheck cannot sufficiently prepare for unexpected expenses. You should typically set aside at least $2,000 for emergency expenses like medical bills and automotive repairs. Some financial planners recommend setting aside at least six months’ income in an emergency account. In addition, if you are saving for major purchases like real estate or car purchases, you should save considerably more than 10 percent from each paycheck if at all possible.

The 50-20-30 Rule

To achieve a balance of savings and spending, try balancing your paychecks into three categories. Half of each paycheck may be used for must-have expenses like housing and food. Another 30 percent of each paycheck then becomes available for niceties like Internet service, additional television channels and luxuries. Save the remaining 20 percent by either stashing it away in a savings or retirement account, investing it, setting it aside for emergencies or using it to repay outstanding debts. Under this plan, a worker who earns $2,500 per paycheck should set aside at least $500 per check for savings.


Wage earners who start saving later in life should save a larger percentage, and those who plan active retirements with many expenses should set aside a considerably higher amount from each paycheck. Though you may experience difficulty saving even the minimum recommended amount, financial planners stress that you should pay yourself first by setting aside savings right away. If you have an Individual Retirement Arrangement, or IRA, you can use the account to take tax deductions on saved money. In addition, if you have a 401(k) account with employer matching, you can take advantage of additional tax considerations, but you should not consider the employer contribution in the 10 to 20 percent savings calculation.

About the Author

Keith Evans has been writing professionally since 1994 and now works from his office outside of Orlando. He has written for various print and online publications and wrote the book, "Appearances: The Art of Class." Evans holds a Bachelor of Arts in organizational communication from Rollins College and is pursuing a Master of Business Administration in strategic leadership from Andrew Jackson University.

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