Image courtesy of FPS Insurance

Many people will put some money aside each month. This could be into an emergency savings fund, towards a mortgage deposit, to pay off debts, for retirement or for other things. It can be hard though, knowing how much we should save up each month.

It is worth looking at all of your financial affairs when you are deciding this. You will need to know how much you earn and how much your bills are so that you know how much you have left each month. You will need to consider what debts you have and whether it is better to pay them off before you start to save any money and you need to consider what you are saving for.

It is wise to have some money in case of emergencies, but if you have any debts, then it will probably be cheaper to pay those off rather than keeping the money in a savings account. You may feel that you like some savings, but the debt will be so much cheaper for you if you can get it paid off early.

There are some people which say that a certain percentage of your income should be saved each month. Although this can be one way of working it out, it is better to see how much you can afford to save. Look at how much you have to spend each month on rent, utilities, transport, food and other bills and expenses and then you will be able to see what you have left. It will then be up to you to decide whether you want to save all of this money or have some to spend on luxuries. Once you have decided on an amount then set up a direct debit so that money goes automatically into a savings account just after you are paid and then you can guarantee that will always be saved. You can always add to it if you have extra money left at the end of the month. Doing this will ensure that you do not spend the money by mistake and that you budget carefully for the rest of the month as you will only be able to spend the money that is left.

It can be wise to try to save as much money as possible. You never know when you might need some money to fall back on and having a nice pot of savings could help you to avoid having to get a loan in the future. It is also a good idea to save up towards your retirement or other future events when perhaps you may not have so much money or perhaps not have the opportunity to earn as much or anything at all.  Thinking of the future is always wise as you will be able to know whether you will have enough money to manage and you will get a peace of mind knowing that there is some there just in case. It can make a big difference.