How Much Should I Save Monthly if I’m in Debt?

Saving money is always a priority, but the amount you save depends on your other goals, such as paying off debt. A rule of thumb is to save at least $1,000 to cover emergency expenses. Consider labeling your emergency account, “Debt-Proof Insurance.” The title is a reminder that the account exists to keep you out of debt. Without cash to pay for emergency expenses, you may find yourself in a never-ending cycle of paying off debt, having an unexpected expense, and having to use credit to pay for the cost. When your account drops below $1,000, stop extra payments towards debt and get your account back up to $1,000. Once it’s at $1,000, use the extra money to continue your debt payoff strategy.

In addition to saving for emergency expenses, save for the expenses you know will happen during the year. This includes scheduled car and home maintenance. These expenses should be a category in your budget.

Once you pay off your debt, celebrate and treat yourself (within reason). Then save at least three months of your monthly living expenses. Ideally, you want to save at least 10% of your income monthly. Prioritize savings like it’s a bill so you won’t have to pay a credit card bill instead.

Take Charge of Your Savings
Earn rewards for creating a brighter future
Sign up to save more

Recommended Articles

Overcoming Tax Fear: What to Do If You Have Been Avoiding Taxes

Introduction The IRS estimates that roughly 10 million people don’t file their taxes each year. If you have been avoiding your taxes, you’re not alone. This avoidance is commonly known as tax fear. Tax fear is the anxiety or avoidance behavior stemming from the stress of dealing with taxes.  This anxiety and avoidance can come… Read more

Debt and Taxes: What You Need to Know 

Who doesn’t love getting a tax refund? It can be a rare chance to have one lump sum of funds to meet a goal – whether that’s bolstering savings, paying off a credit card, or taking a dream vacation. But before you decide how to use it, it’s important to understand how debt and taxes… Read more

How Finances Impact Your Physical Health (And What You Can Do About It)

The Money-Health Connection Your finances affect everything in your life, from where you live to the clothes you choose. Going through tough times financially can even affect your health. The impact of financial stress can cause significant changes in your physical well-being. Knowing financial stress affects your health can feel scary. The good news is… Read more