By Paul Feeney, Founder and Chief Executive Officer, Otivo
Ask the internet how much to save each month and you'll get a confident number, usually 20%, delivered as if it were a law of physics. It's a decent starting point. But the real answer is more personal and less tidy, shaped by your income, your costs and your goals. And the rate you choose matters less than whether you actually stick to it. Here's how to land on a figure that works.
Quick answer
A common guideline is saving around 20% of your income, but the right amount depends on your income, expenses and goals. What matters most is saving consistently, even a smaller amount saved every month builds the habit and the balance. As at July 2026, automating your savings so they happen before you spend is one of the most reliable approaches.
Is there a magic savings percentage?
The oft-quoted figure is around 20% of your income, and as a target it's a reasonable anchor. But treating it as a universal rule ignores reality, someone on a tight income with high essential costs may find 20% impossible, while someone with room to spare could aim higher. The percentage is a guide to aspire to, not a pass-fail line. What suits you depends on your own numbers, not a figure pulled from a headline.
How do you work out what you can save?
Start from what's left after the essentials. Subtract your genuine needs, housing, utilities, food, transport, from your income, and look at what remains. Some of that goes to the things you enjoy, and some can go to savings. The realistic savings figure is the amount you can set aside consistently without leaving yourself so squeezed that you raid it a week later. Finding that sustainable number matters more than hitting an ambitious one once.
Why does consistency beat the amount?
Because saving is a habit before it's a sum. A modest amount saved every single month, without fail, builds both the discipline and, through compounding over time, the balance, often outperforming sporadic large deposits that depend on willpower and good months. The act of saving regularly is what embeds the behaviour, and the behaviour is what carries you over years. A smaller consistent figure you never break beats a bigger one you manage twice a year.
How do you make saving automatic?
The single most effective trick is to remove the decision. Set up an automatic transfer to a savings account on the day you're paid, before the money is available to spend, an approach often called paying yourself first. Because the money moves before you see it, you adjust to living on what's left, and saving stops relying on discipline at the end of the month when the account is already thin. Automation quietly does the work willpower struggles with.
What should you save towards?
Direction helps the habit stick. The usual first priority is an emergency fund, a buffer for unexpected costs, because it prevents a surprise from turning into debt. Beyond that, saving gains momentum when it's pointed at specific goals, a home deposit, a holiday, a bigger financial cushion, rather than a vague pile. Knowing what the money is for makes it far easier to keep setting it aside month after month.
Frequently asked questions
How much of my income should I save?
Around 20% is a common guide, but the right amount depends on your income, essential costs and goals. Someone with high fixed costs may save less, while someone with room to spare might save more.
Is it okay to save a small amount?
Yes. Consistency matters more than size, since a small amount saved every month builds both the habit and, through compounding, the balance. A sustainable figure beats an ambitious one you can't keep.
How can I save more reliably?
Automate it. Set up a transfer to savings on payday, before the money is available to spend, so saving happens first and you adjust to living on what remains.
Where to from here
The right figure is the one you'll keep setting aside, month after month. Otivo, a licensed Australian financial advice platform holding AFSL and Australian Credit Licence No. 485665, offers a debt advice module that works with your household income and expenses to find room to manage money and pay down debt. It helps you find a sustainable amount to put aside.
Sources
- ASIC MoneySmart — saving and simple ways to save — moneysmart.gov.au
Disclaimer
The information in this communication is current as at July 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.