Personal Finance: How Much of Your Salary Should You Save Every Month?

The advice all millionaires give during forums and interviews concerning money is this: Save, save save. In fact 99% of millionaires wish they had started saving earlier on in their lives.

We all know the importance of saving as it allows us to make big purchases and investments which a mere salary cannot afford us.

Saving also gives us a sense of financial freedom and security for the days to come.

This brings us to the question: How much of your salary and earnings should you save every month?

What to save every month

1.For those with a meagre salary

Some people might feel that they do not have the capacity to save because they earn very little. But is this true?

According to financial experts, you should save at least 20% of your income every month.

If you earn Ksh 7,000, Ksh 1400 should go into your savings. Why? The truth is that it is very risky to live without some money to fall back on.

Often times, you need to prepare for eventualities that might be beyond your control, such as a being fired or being forced to go on compulsory leave.

A big chunk of Nakumatt’s employees have been forced to take compulsory leave in the last one week. If one of the employees has nothing in their bank account to cater for his needs during this compulsory leave, you will agree with me that they might have it rough trying to make ends meet.

This goes to show just how important it is to save even the little that you have, for the future.

2.For those caught up in the comparison trap

We have all been a victim of this. Comparing yourself to other people is one of the causes of poverty in our society. For example, you find that your colleague at work can afford to buy lunch costing Ksh 300 every day, and because you want to fit in and feel at per with him/her, you decide to also start buying the same food whereas you know you cannot afford it.

In order to effectively save your money, you must walk in your own lane. Buy things you can afford and quit comparing yourself to your circle of friends or those around you.

At the end of the day, if you spend your money carelessly, you will end up facing the consequences of not having any money left with you.

3.For those looking to buy cars, homes and have a comfortable life

A colleague of mine started saving for her future child even before she got married. This is financial wisdom and it is the kind of thinking you should have.

Instead of thinking about today only, it is also wise that you think about your future, your dreams and aspirations, and what it is going to take in order to get there.

Fred Murimi, the Capital Director at Centum Investments says that the amount you should save every month should be what you pay yourself.

You see, each one of us gets a salary every month, and we end up giving it away to other people in form of bills, transport, food etc.

According to Mr.Murimi, saving is the only way that allows you to pay yourself. And with that he advices all salaried people to save at least 40% of their salary.

So if you earn Ksh 40,000 for instance, 40% means that you pay yourself Ksh.16,000 ever month and in a year,  you will have saved 192,000.

In conclusion

Saving requires discipline and focus. It is about denying yourself for the future, and managing the little that you have.

How much of your salary do you save? Share with us below.

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