How Much Should You Save?

Posted by Simon Moore on August 19

There are two ways to come at the question at how much to save. One is to examine your income and costs and determine how much you are able to put away each month. However, the second is if you have a specific goal in mind, how much to you realistically need to save to get there?

For example, if you want a new car, how much should you be saving each month to buy that car outright in 3 years? This is not to say that you necessarily can or should save that much. For example, you can't save for a car if it means you don't have enough to cover the weekly food shop, and if you're in debt, paying that down before saving can often make sense. Still, hopefully some of the numbers below give you a sense of what a realistic savings goal might do for you.

Obviously, it also matters how quickly you want to save. You can save at a more relaxed pace if you're looking to get a new house in 10 years, rather than in 5.


Savings Goal Years To Save Approximately Monthly Savings Rate
Basic car £10,000 3 years £265
Nice car £20,000 3 years


Flashy car £40,000 5 years £650
Deposit for a smaller home outside London £30,000 5 years £470
Deposit for a larger home outside London £50,000

7 years

Deposit for a London home £60,000 10 years £425


The above gives you a rough idea of where different savings rates may take you. The numbers assume a 4% return on your savings each year and that you save every month. You can see that saving more helps you reach your goal, but so does saving for longer. For example, when saving for a home saving for twice as long can help you achieve a bigger savings pot, even if you save less each month. Of course, the exact figures do depend to some extent on what return you expect to get on your savings.

Written by Simon Moore

Simon is responsible for investing and related content at Moola. He was previously CIO of FutureAdvisor, a US digital advisor. His most recent book Digital Wealth, explains automated investing. He studied economics at Oxford, and completed his MBA at the Kellogg School of Management.

Ready to see how your money could grow?

a month

Build a free example investment portfolio with no commitment.