The personal savings rate in the U.S. is 4.3%, meaning that, on average, Americans save less than 10% of their monthly after-tax income. Many people are stuck in a cycle of debt and instability, making it harder to create a secure financial future.

Creating a personalized monthly savings plan is the best way to reach your financial goals. Saving money consistently helps you build wealth, prepare for retirement, and even pay for big purchases like a house or car. While the biggest hurdle is getting started, developing a plan is much easier when you understand how each financial decision impacts your overall savings. Below, learn how much to save each month, how to calculate your savings goal, and where to store your savings.

A savings plan is a strategy for putting aside a portion of your monthly income to meet a specific financial goal. This might be retirement, a down payment on a house, or an emergency fund.

Unlike casual saving, where you’re typically just putting aside what's left over at the end of the month, a savings plan prioritizes saving — making it a core part of your budgeting, rather than an afterthought.

A personalized savings plan offers several benefits, including:

• Financial security: Setting aside funds for emergencies provides a safety net that’s there when you need it.
• Goal achievement: When you have specific financial goals, you’re more motivated to save and more likely to meet your savings goals.
• Debt avoidance: With a solid savings plan, you can save up the funds to pay cash for major purchases or unforeseen expenses, instead of taking on high-interest debt.
• Increased financial literacy: By creating a savings plan, you’ll learn more about different financial concepts, increasing your financial literacy and helping you make better financial decisions.
• Peace of mind: Knowing you have a financial buffer in your savings account can significantly reduce stress and improve your overall well-being.

The right amount to save each month depends on both your immediate and future needs. There’s no “one-size-fits-all” approach since each person's financial circumstances and needs are unique. Your monthly savings should reflect your income, expenses, debts, lifestyle, and financial goals. Use these tips to help you set up a personalized savings plan. 

Consider your existing financial accounts

When setting up a personalized savings plan, take inventory of your existing financial accounts. These typically include:

• Savings accounts: These accounts are the most traditional and low-risk way to save money. They offer modest interest rates and are an excellent place to store your emergency fund or short-term savings. Review your savings accounts to see how much you already have saved and how much more you need to meet your goals.
• Checking accounts: A checking account is where most of your money management happens. While it’s not typically used for long-term savings, it can help you understand how much you're earning, how much you're spending, and how much you could potentially save each month.
• Investment accounts: These can include brokerage accounts or retirement accounts (like a 401k or an IRA) that allow you to invest your money in the stock market or other investments. They have higher returns than typical bank accounts but also carry a higher risk. High-yield investments can accelerate your savings growth, helping you reach your goals faster.

Inventory all debts

Before you solidify your savings plan, you’ll need to assess all your outstanding debts. This includes credit card debt, student loans, car loans, and any other liabilities you may have. List all the debts and the total amount owed, the interest rate, and the monthly payment for each.

Debt management helps you reduce the interest you pay and can free up more money for savings. So if you have a substantial amount of debt, consider options like debt consolidation, refinancing, or transfer of balances to low- or no-interest cards. 

Think about your savings goals

Your specific savings goals will have a big impact on your savings plan. Are you saving for a dream vacation, a down payment on a house, an emergency fund, or a comfortable retirement?

Defining your goals can help shape your savings strategy. For instance, if you're saving for an emergency fund, your priority will be to build a reserve of easily accessible cash. This might mean putting a significant portion of your income into a regular savings account until you have enough to cover six months' worth of living expenses.

On the other hand, if your goal is to save for a vacation or a down payment on a house, you might want to consider a high-yield savings account, Certificates of Deposit (CDs), or short-term bonds. These accounts can earn more interest than a regular savings account, helping you reach your goal more quickly.

Or you can sign up for Accrue Savings, an innovative savings tool that helps you effortlessly save for specific purchases. As you contribute toward your goal, you can get additional funds from crowdfunding or the brand you plan to purchase from. 

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Adjust your existing budget

If you already have a budget, it's important to review and revise it to help you maximize your savings. Look for ways to cut unnecessary expenses or even just spend smarter to free up more money. Use these smart strategies to help you cut costs:

• Cancel any subscriptions you don't use or need. This could be anything from streaming services to unnecessary software to unused gym memberships.
• Shop smarter by buying non-perishable items in bulk and taking advantage of sales for items you need.
• Cut back on eating out. Instead, cook at home most of the time and bring your lunch to work.
• Look for cheaper entertainment options, such as hosting a movie night at home, visiting a local park, or exploring free events in your city.

While adjusting your budget might take time and discipline, the long-term financial benefits will be worth it.

Look at short-term vs. long-term goals

Short-term goals are those you aim to achieve in the near future, like saving for a vacation, buying new appliances, or building an emergency fund. Long-term goals are those set for more than three years in the future, like saving for a child's education, buying a home, or a retirement plan.

Balancing short-term and long-term savings goals can be tricky, so you’ll need to prioritize based on urgency and importance. Emergency savings and debt reduction, for instance, should be first on your list. Once these are taken care of, you can start funding other short-term and long-term goals.

The key to successful saving is having realistic and achievable goals. Unrealistic ambitions can lead to frustration and disappointment, which might even sabotage your efforts.

Use a common savings rule for a baseline

A good starting point is to use a common savings rule, such as the 50/30/20 budgeting rule. This rule suggests that you should allocate 50% of your take-home income to necessities (e.g., rent, food, transportation), 30% to discretionary items (e.g., entertainment, travel), and 20% to savings.

Of course, the exact breakdown will depend on your current financial situation and goals. You may need to adjust the percentages based on what works for you. For instance, if you want to increase your emergency fund or pay off debt, you may need to lower the percentage allocated for discretionary items.

Decide how much you want to allocate toward each goal

Once you've established your baseline savings amount, it's time to decide how much you want to allocate toward each goal. 

For instance, if your total monthly income is $4,000 and 20% goes toward savings ($800), you might allocate $400 towards retirement savings, $200 for a down payment on a house, and $200 for an upcoming vacation. You can adjust the amount for each goal based on your financial goals and timeline.

Plug your details into a savings calculator

Websites like Bankrate, NerdWallet, and SmartAsset offer reliable online savings calculators to help streamline your savings calculations, making it easier to set realistic goals tailored to your needs. Simply plug in the details for each of your goals (amount, timeframe, interest rate, etc.), and the calculator will tell you the amount of money you should contribute monthly to reach your goals.

Do the math yourself

You can also calculate your savings targets manually. The basic formula is simple: Divide the amount you want to save by the number of months you’d like to save it in. For instance, if you're saving for a vacation that costs $3,000 and want to take the trip in 12 months, you'll need to save $250 monthly or $62.50 weekly.

Monitor and update your savings plan as needed

Remember, your financial goals and circumstances are not set in stone — they're dynamic and likely to change over time. As your income, expenses, and life circumstances change, so should your savings plan. 

You may receive a raise, change jobs, or start a family, which could affect your savings targets. So it's essential to revisit your savings plan regularly and adjust as needed. A plan that worked for you a year ago might not be appropriate for your current situation.

When deciding where to keep your savings, you’ll need to consider interest rates, accessibility, risk tolerance, and your financial goals. Different savings account options, such as traditional savings accounts, money market accounts, CDs, and mutual funds, offer varying levels of interest and risk. 

Depending on your financial planning goals and risk tolerance, you might use a few different types of accounts.

How much do you plan to save?

If you’re planning to save a smaller amount for a short-term goal, like a vacation or a large purchase, interest rates won’t matter too much. So a traditional savings account is a great option. 

But if you're building up a large amount of long-term savings for a child’s college fund or your retirement, then you’ll want to keep your money in an investment account that will generate a substantial amount of interest over time.

If your savings goals fall somewhere in the middle, like saving for a down payment on a house or to pay for a vehicle in cash, money market accounts, or CDs are a smart choice. They lock in your funds for a set period of time, but they let you build up a generous amount of interest in exchange. 

When do you need the money?

It’s important to consider when you plan to use the money you’re saving to make sure it will be accessible when you need it.

Use a regular high-yield savings account for short-term goals (like vacations or emergency funds). These accounts offer easier access to your funds without penalties for early withdrawal.

For long-term goals (like retirement or college funds), consider an IRA or a CD, which offer higher rates of return in exchange for locking away your money for a set period of time.

Accrue Savings is best suited for big-ticket purchases and long-term financial goals. It allows you to save for a goal over time, with the added benefit of earning money towards that goal from your favorite brands. You can set up automatic transfers to your Accrue account, giving you the consistency you need to reach your goals faster.

What are you saving for?

Not all savings accounts are created equal, and some will offer higher returns based on the type of goal you're saving for. For example, If you’re saving for retirement, you’ll want to invest in a tax-advantaged account like an IRA or 401(k) to maximize your return on investment. 

But if you're saving for a home, you should consider investing in a high-yield savings account or money market account to take advantage of higher interest rates.

With Accrue Savings, you can create a specific savings goal and save over time without straining your budget. You can pause, speed up, or slow down your contributions at any time without penalty. Track your progress with Accrue's intuitive dashboard and watch your savings grow.

Unlock smarter savings with Accrue Savings

A personalized monthly savings plan is an excellent way to stay on track with your financial goals. Whether you're saving for retirement, a dream vacation, or a down payment on a house, the right savings plan will help you reach your goals faster and more efficiently.

Accrue Savings helps you bring your financial dreams into focus by unlocking smarter savings. With automated transfers, access to exclusive offers from your favorite brands, and intuitive tracking tools, Accrue makes it easier than ever for you to reach your financial goals. 

Check out our partners and sign up for a free account today to take control of your financial future.