Saving money each month is an important part of achieving financial goals and building wealth over time. The amount that should be saved depends on individual circumstances and long-term objectives. While saving $1,500 monthly may be reasonable for some, it may not be enough for others to meet their specific needs and desired lifestyle.
What are the benefits of saving $1500 per month?
Saving $1500 per month provides several advantages:
- Builds an emergency fund – Saving this amount regularly allows you to build up an emergency fund of 3-6 months of living expenses over time. This provides a cushion against unexpected costs like medical bills, car repairs, job loss, etc.
- Achieves retirement goals – Putting away $1500 per month, invested properly, can lead to a sizable retirement nest egg over 10, 20 or 30 years. This provides income and security during retirement.
- Reaches other savings goals – Saving diligently allows major goals to be accomplished like buying a house, starting a business, paying for education, taking vacations, etc. $1500 a month can go a long way over time.
- Earns interest – Money saved and invested starts earning compound interest, which accelerates wealth accumulation over long periods.
- Builds financial discipline – Regularly saving requires discipline, which becomes a beneficial lifetime habit.
In summary, saving $1500 monthly allows important financial goals to be reached, protection from risk, and harnessing of compound interest for increased prosperity.
What factors determine if $1500 monthly is enough?
Several personal factors determine if saving $1500 per month is sufficient or should be higher, such as:
- Income level – Higher incomes allow greater savings rates. Those earning $100k can save a larger percentage than those at $50k.
- Current savings – Those starting with no savings need to save more aggressively than those who have already been saving up.
- Regular expenses – Monthly housing, transportation, food, utility and other costs affect how much can be saved.
- Financial goals – Specific targets for retirement, housing down payment, college, etc. dictate how much must be saved.
- Time horizon – More years to invest allows savings to compound to a larger amount.
- Risk tolerance – A more aggressive investor can attain targets with less savings but more risk.
- Debt levels – Higher debt like student loans and credit cards make it harder to save.
Looking at all these factors for your individual situation determines if $1500 is the right monthly savings target or if more should be aimed for.
How much should you save based on income?
A good guideline is to save at least 10-15% of your gross income, but the amount should increase with higher income levels. Here are suggested monthly savings amounts based on income:
| Annual Income | Recommended Monthly Savings |
| $30,000 | $375 |
| $50,000 | $625 |
| $75,000 | $938 |
| $100,000 | $1,250 |
| $150,000 | $1,875 |
This table provides rough estimates, but the key factor is to save more as your income increases. Saving 10% at $50k income has much less impact than at $100k income.
How much should you have saved by different ages?
Personal finance experts recommend making progress on your savings and accumulating the following amounts by certain ages as retirement approaches:
- Age 30 – Have 1x your salary saved
- Age 35 – Have 2x your salary saved
- Age 40 – Have 3x your salary saved
- Age 45 – Have 4x your salary saved
- Age 50 – Have 6x your salary saved
- Age 60 – Have 8x your salary saved
- Age 67 – Have 10x your salary saved
This provides a rough guide on the trajectory your savings should be on. Falling behind these benchmarks calls for increasing your monthly savings rate.
Other typical savings benchmarks
- Have 1-2 months salary saved by age 30
- Have 3-6 months salary saved by age 40
- Have 1x salary by age 50
- Have 2-3x salary by age 60
- Have 8x salary saved by age 67
Review the specific dollar amounts for your income and whether your current savings are on track based on your age. Increase monthly contributions if behind on these targets.
How much do you need to retire comfortably?
To live comfortably in retirement, most experts recommend having between $500,000 and $1,500,000 saved, excluding primary home equity. This provides $20k-60k annual income in retirement at a 4% withdrawal rate.
Monthly savings required to accumulate this depends greatly on years until retirement, investment returns and lifestyle factors. As a rough estimate based on retiring at age 65:
- Retiring at 65 with $500k – Save $416 per month over 40 years at a 6% return
- Retiring at 65 with $1 million – Save $833 per month over 40 years at a 6% return
- Retiring at 65 with $1.5 million Save $1250 per month over 40 years at a 6% return
Retiring significantly earlier or later than 65 would require adjusting these monthly savings to achieve the target nest egg. Those numbers demonstrate monthly retirement savings near $1500 may be sufficient or need to be increased depending on total goal.
Recommended retirement savings by age
| Age | Savings Benchmark |
| 30 | $50,000 |
| 40 | $200,000 |
| 50 | $300,000 |
| 60 | $500,000 |
| 65 | $750,000 |
Use these key retirement savings milestones by age to gauge if you need to increase your monthly savings or investment returns to stay on track.
How much should you save for other financial goals?
In addition to retirement, other major financial goals require sustained monthly saving and planning. Here are benchmarks for some common goals:
Down payment on a house
- 10% down payment on $200k home – Save $550 per month for 3 years
- 20% down payment on $300k home – Save $775 per month for 5 years
- 50% down payment on $400k home – Save $1,250 per month for 10 years
Child’s college education
- Public in-state college – Save $425 per month for 18 years
- Public out-of-state college – Save $650 per month for 18 years
- Private college – Save $875 per month for 18 years
Vacation fund
- $3000 basic vacation – Save $250 per month for 12 months
- $5000 luxury vacation – Save $416 per month for 12 months
- $10,000 dream trip – Save $833 per month for 12 months
Build up the amounts needed for your specific circumstances. If you are behind schedule, increase monthly savings to reach the benchmarks sooner.
How much should you save based on debt repayment needs?
Existing debts make it harder to save at higher percentages of income. Here is how debt payments affect recommended savings:
| Monthly Debt Payment | Recommended Minimum Monthly Savings |
| $200 | $500 |
| $500 | $750 |
| $1,000 | $1,000 |
| $1,500 | $1,250 |
| $2,000+ | Pay off debt first before focus on saving |
Paying down debt should take priority over saving in most cases. Build up a minimal emergency fund first, then put extra money towards debt repayment before trying to maximize savings.
How can you increase your savings rate?
If the current amount you are saving falls short of the benchmarks, here are some steps to take in order to increase your monthly savings:
- Boost income – Increase earnings through raises, promotions, new jobs, side hustles or monetizing skills.
- Reduce expenses – Critically evaluate needs vs wants and cut discretionary spending on eating out, entertainment, subscriptions, etc.
- Minimize taxes – Contribute to pre-tax retirement accounts, FSAs and HSAs to reduce taxable income.
- Pay off debts – Send any extra money towards wiping out credit card, auto and student loan debts.
- Refinance loans – Consider refinancing mortgages, student loans and other debt to lower monthly payments.
- Get roommates – Splitting rent and utilities reduces housing costs substantially.
- Move to lower cost area – Relocating to a less expensive city or neighborhood stretches your money further.
Getting creative and diligent about increasing income while reducing costs makes it possible to ramp up monthly savings and reach financial targets sooner.
Conclusion
Saving $1,500 per month would be considered quite substantial and sufficient by many standards. However, circumstances like high cost areas, income potential, existing savings, retirement timescale, debts, family status and other goals need to be weighed to determine if this savings rate or something higher is prudent for your situation.
Benchmarking against monthly amounts recommended for your income, age, debts and objectives provides guidance on whether $1,500 monthly is adequate. If your current savings are falling significantly short, it makes sense to explore ways to increase this amount to get your savings on track and achieve your important life goals.