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

Why You Need a Holiday Fund & How to Build One

Did you know the average American spends just under $1,000 on Christmas, according to research by the National Retail Federation? While Christmas is typically the holiday people spend the most on, other holidays and celebrations throughout the year can also sneak up on us.  With expenses for birthdays, anniversaries, Valentine’s Day, graduations, weddings, and other… Read more

Considering a Credit Card? Here’s What You Need to Get Started 

So many factors go into your financial health. From your monthly expenses to transportation and even climate-related events, every aspect of your life helps define your budget and progress toward long-term goals. One component of your financial health is your credit. Credit can play a major part in how you access loans, qualify for particular… Read more