The amount of money you should aim to have in your savings will depend on your income, your living expenses, your age and your savings goals.
Let’s take a look at the average savings for Brits in each age group so you can get an idea of where you’re at. If you’re a bit below the average, don’t worry, we’ll also outline ways to boost your savings balance.
How much should I have in savings?
You should aim to have at least three months (and ideally six months) worth of living expenses in your savings. This is to ensure you can get by if you were to suddenly lose your job or be out of work for another reason, such as health problems or a change in your personal circumstances. If you were to find yourself out of work, your standard living expenses like rent, mortgage payments, energy bills and grocery bills don’t stop.
If your monthly living expenses are £1,000, you should aim to have £3,000 in your savings at the very least. If your living expenses are higher at, say, £2,000 a month, you should aim to have closer to £6,000 in your savings at any given time.
To work out your current living expenses you need to look at your bank statements and calculate how much is coming in and how much is going out each month. The amount that’s left over (if there is any) is your monthly savings. The amount that’s going out is how much you spend to live.
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Comparing how much you have in savings against the average figure can be a useful way to see whether your savings are on track or not.
Finder UK data shows that the majority of Brits have some savings, with almost 4 in 5 (78.35%) having something put away for a rainy day. The average amount saved per person is £6,756 but a lot of people don’t have this much. One-third have less than £600 in savings, and one-tenth have no savings at all.
Here’s how much money people in the following age groups have in savings on average:
Aged 56-74:£9,758
Aged 40-55:£6,160
Aged 24-39: £4,614
Aged under 24:£2,530
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There’s no magical number for the amount you should be saving each month (sorry!).
One popular method to figure out what you should be saving is the 50/30/20 rule. This method suggests that 50% of your monthly income should go towards essential living expenses such as rent, food and other vital bills. Then, 30% of your income goes towards other non-essential spending like entertainment (hello, Netflix!), eating out, technology and weekends away. The remaining 20% of your monthly income should go towards your savings.
Using this method, if your monthly income was £1,500 you could aim to save £300 per month. And as your income grows, so should your savings. So let’s say you get a big pay rise and your income is now £3,000 a month; your monthly savings should also be increased to £600 a month.
Of course, this method isn’t set in stone, so we’d encourage you to tweak it until it works for you. You might even find that you can save a lot more than 20% of your monthly income, but 20% is a good starting point to aim for.
How to boost your savings
If your savings aren’t as high as they could be, don’t worry, there are lots of ways to boost your savings. Here are a few to get you started:
Open a dedicated savings account with a competitive interest rate. The better the interest rate on your savings account, the faster your savings can grow.
Look for ways to reduce your spending. Take a look at your recent transactions for things you can easily cut out or cut back on. If you need some inspiration, here are our budgeting tips to help you get on top of your finances.
Look for ways to increase your income. There are many ways to earn money from a side hustle. Consider selling unwanted items online, renting out a spare room or car space, driving for a ride-sharing company, doing freelance work in your industry or putting your home up for rent on Airbnb when you’re not there.
Compare and switch your services. From your health insurance to your bank account, there are plenty of savings to be made by switching.
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Alison Banney is the banking and investments editor at Finder. She has written about finance for over six years, with her work featured on sites including Yahoo Finance, Money Magazine and Dynamic Business. She has previously worked at Westpac, and has written for several other major banks including BCU, Greater Bank and Gateway Credit Union. Alison has a Bachelor of Communications from Newcastle University, with a double major in Journalism and Public Relations. She has ASIC RG146 compliance certificates for Financial Advice, Securities and Managed Investments and Superannuation. Outside of Finder, you’ll likely find her somewhere near the ocean. See full bio
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