Chime® is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

How Much of Your Paycheck Should You Save? Percentages Explained

Rebecca Lake • October 23, 2023

Saving money from your monthly paychecks can be difficult, especially if you are struggling to pay off debt and bills. Learning how you can set aside 20% from each paycheck for future expenses is important to your financial well-being and can help alleviate routine stress.

Many Americans live paycheck to paycheck, so if you’re feeling stressed, you’re not alone. The thought of having to save money can be overwhelming, especially when your monthly paychecks are already allocated to several different payments and bills. 

The most popular and widely used suggestion is to save 20% of each paycheck, whether that’s weekly or bi-weekly. The challenge is sometimes figuring out how to save money, while still covering your basic living expenses and trying to pay down debt. Let’s take a look at some realistic expectations you can set for yourself and the steps you can take to get started. 

Easy online banking

  • Checking Account with no monthly fees
  • 50,000+ fee-free ATMs~
  • Chime Visa® Debit Card
Get Started

How much you should save from every paycheck

If you are trying to figure out how much you should save from your paycheck each month, there are several different formulas and budgeting tools to use, with the most popular being the 50/30/20 rule. This suggests you should intend to save 20% of your monthly income or every paycheck. This rule advocates putting 50% of your income toward your essential expenses each month, spending 30%, and then saving the remaining 20%. 

50/20/30 rule | Chime

There is no one-size-fits-all way to save money. But, there are tried and true methods that you can try, and this is one of them. Ultimately you want to save as much money as possible, for things like retirement and bigger life purchases. But you also want to keep in mind having some cash flow leftover to have a little fun with today. This way, you aren’t restricting yourself and falling back into a bad spending routine. 

Did You Know?
According to the 2020 Employee Financial Wellness Survey, 54% of the American workforce is financially stressed.

How to save money from your paycheck

If you’re looking for tips on how to save money, you’re in the right place. Take a look at 5 strategies that can help you save money from your paycheck every month: 

1. Break Your Paychecks Down

The first step when considering saving money each paycheck is to evaluate your take-home pay. How much money do you have to spend each paycheck after taxes, insurance, and other deductions are taken from your salary? 

Once you determine what you have to work with, you can start to divide your paycheck more accurately to cover your financial wants and needs.

2. Evaluate Your Budget and Expenses

Understanding how you spend money can give you key insights when you’re looking to save money. Consider creating a budget to track your regular and unexpected expenses. In doing so, you may be able to spot areas to cut back on spending. 

For example, you may find that your spending on takeout food is incredibly high after crunching the numbers. To reduce spending on meals out, you might then consider some ways to alter your lifestyle and save on weekly meals. 

  • Try planning your meals for the week based on sales and shop with a list you’ll stick to. 
  • Use coupons and cashback apps.
  • Create a menu for each week to eliminate food waste. 

You can continue to eat a healthy diet while sticking to a budget.

Other expenses you may want to assess include utility bills or subscription services you don’t use. You could also find savings in your budget by switching to a bank account with no monthly fees

3. Minimize Debt Expenses

There are some ways to adjust your regular debt payments. Refinancing student loans, for example, can help you get a lower interest rate. This can also lower your monthly payment and save you money in the long run, ultimately giving you more money in your budget to save. The same is true for transferring high-interest credit card debt to a balance transfer card with a 0% introductory promotional rate. 

4. Find Ways to Earn Extra Cash

Sometimes, you just don’t make enough money to meet your financial needs or goals in a timely manner. When your salary isn’t cutting it, look for ways to add another source of income to your life. 

If possible, apply for a second job, even if it’s a few extra shifts a week. You can also do things like sell your old clothes, or turn one of your passions into a side hustle that can bring in additional income. 

5. Set Up Automatic Transfers to Your Savings Account

After you evaluate your budget, expenses, and financial goals, determine how much you’ll need to set aside each month to pay your bills and make headway on your savings goals. Once you know how much to save each month, you can set up automatic transfers to simplify the savings process. 

There are two main methods of automating your savings:

  • Use direct deposit to separate your paycheck into multiple bank accounts. In doing so, you can automatically send money to your savings account or emergency fund so there is little chance you’ll spend it before you think to set it aside.
  • If direct deposit is not an option through your employer, consider an automatic savings transfer. You can set up this type of transfer to move money from your checking account to your savings account each payday.

Saving goals: Where to put that 20%

Now that you know how to save 20% of your paycheck every month, here are 2 great places to start putting that money to achieve financial success!

Your Savings Account

Every person’s financial circumstances are different, so it’s tough to compare savings accounts with other people. A good rule of thumb is to have 3 to 6 months of living expenses saved in case of the loss of a job or emergency. However, outside of that goal, how much you have in your savings is unique to your lifestyle and personal spending habits

It’s a great idea to start with setting smaller goals for yourself. If you are new to saving, aim to save an extra $1,000 every year, just to have, outside of your emergency fund. If you’re looking at it from the 50/30/20 savings recommendation, you will most likely have more saved by the end of the year.

Try not to get down about falling behind, and instead work toward trying to learn more about money and where you can save. These are great tools to start with, but keep in mind, the ultimate answer for how much to save monthly comes down to how much you’re taking home, what your expenses are, and how much, if anything, you’re paying toward debt. 

Your Retirement Account

Saving for retirement is something a lot of young people don’t think about since it seems so far away and insignificant at the moment. But, the sooner you start saving for retirement, the better off you’ll be down the line.

Financial experts typically recommend setting aside 15% of your pre-taxed income for retirement. However, this may be a stretch for many people. If contributing 15% of your paycheck to a retirement fund is unrealistic given your salary and living expenses, save what you can. Start small and increase your contribution when you’re able to. 

Reasons to increase your contribution include:

  • Paying off a large debt
  • Receiving a raise
  • A significant change in lifestyle that lowers your overall expenses

In some cases, your employer may not offer a retirement plan. If this is true, you can still take steps to save for retirement on your own. Consider opening an IRA or a solo 401(k) if you’re self-employed.


What if I can’t save 20% of my paycheck?

For those living paycheck to paycheck, saving 20% of their salary sounds impossible, and this might well be the case. If you can’t reach the industry benchmark, you might feel like giving up completely. But remember: Saving something is better than saving nothing.

If saving is a struggle, commit to setting aside 1% of your paycheck after taxes. Yes, just 1%. For example, if your paycheck after taxes is $2,300, you’d save $23 each month. Even this relatively small amount will, over time, help you break the cycle of living paycheck to paycheck and provide a financial cushion in case of an emergency or unexpected expense.

Where should I keep my savings?

Different savings goals may fit different savings accounts. For short-term savings goals, consider keeping your money in a high-yield savings account to help maximize your contributions while remaining flexible, if you need the funds in a pinch. 

Ready to start building your savings even faster? Open a High-Yield Savings Account today with Chime. Chime offers a high-yield savings account to help you make your money grow faster, with a 8x¹ higher Annual Percentage Yield (APY) compared to traditional banks. 

How much money should I put toward investing each month?

If you find yourself with some extra dollars leftover after your expenses and savings are taken care of, you may consider investing those funds. For example, a low-risk investment option may be a simple way to make your money work for you. Before investing, consider all your investment options, and choose the opportunity that best meets your needs.

There’s no specific amount you should worry about putting toward investing. Focus on your savings goals first, and then add investing once you feel comfortable with what you have put away. 

How much does the average American have in savings?

According to ValuePenguin, “American households had a median balance of $5,300 and an average balance of $41,700 in their transaction bank accounts in 2019, according to data collected by the Federal Reserve.” Again, don’t take these numbers too seriously, as every individual’s financial circumstances differ, and it’s best to concentrate on the money you are bringing in and the steps you can take to save it each month. 

Final thoughts

Saving money can be scary, however, don’t let it derail you from making smart choices with your paychecks. You earned that money! And you deserve to make the most of it. With just a little bit of planning, you can start saving like the pros and arm yourself with the finances to offset any of life’s little surprises and work toward your financial goals. 

Easy online banking

  • Checking Account with no monthly fees
  • 50,000+ fee-free ATMs~
  • Chime Visa® Debit Card
Get Started

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

By clicking on some of the links above, you will leave the Chime website and be directed to a third-party website. The privacy practices of those third parties may differ from those of Chime. We recommend you review the privacy statements of those third party websites, as Chime is not responsible for those third parties' privacy or security practices.

Third-party trademarks referenced for informational purposes only; no endorsements implied.

‡ SpotMe® for Credit Builder is an optional, no interest/no fee overdraft line of credit tied to the Secured Deposit Account. SpotMe on Debit is an optional, no fee service attached to your Chime Checking Account (individually or collectively, “SpotMe”). Eligibility for SpotMe requires $200 or more in qualifying direct deposits to your Chime Checking Account each month.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

~ Out-of-network ATM withdrawal and over the counter advance fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

Address: 101 California Street, Floor 5, San Francisco, CA 94111, United States.

No customer support available at HQ. Customer support details available on the website.

© 2013-2024 Chime Financial, Inc. All rights reserved.