We all know saving money is important. There are tons of ways to do it, and today I’m going to answer some questions about how often and when it’s best to save money.
Here’s the short answer:
You should save at the same frequency as you’re getting paid. For example, if you’re paid monthly you should save each month.
Technically speaking, it doesn’t really matter how often you save. The only thing that matters is how much you save (within a given timeframe).
For example, saving $1,000 a month is the exact same as saving $12,000 a year.
However, some frequencies of saving can be easier to stick with. And the key to being a good saver is precisely finding a strategy you can stick with.
For this reason, figuring out how often you should save is essential! So, let’s get to it:
I know saving money can feel impossible when you’ve got mountains of bills to pay monthly.
If you’re in that situation, read this article: Can’t Save Money Because of Bills? Here’s What I Did
You’ll get everything you need to know, in detail, and my personal journey from living paycheck to paycheck to saving 80% of my income.
Let’s move on, and get into a more detailed discussion about how often you should save money:
Should You Save Each Month?
Saving every month is the most popular way to save money. The biggest reason is that most people get paid on a monthly basis.
The easiest way to save consistently is to automate the process. You should not have to go into your bank account and manually transfer money from your checking account to your savings account.
Basically, the more resistance/work you have to put in, the more likely you are to fail at saving money.
The easiest way to automate saving is to set up a transfer from the account you get your paycheck into your saving account. This transfer should ideally happen right after your paycheck arrives.
Since most people get paid once per month, the automated transfer to their savings account would also be once per month. (source)
What I’m trying to say is this:
If you’re paid monthly, you should save each month. It’s easy to automate saving money at the same frequency as you’re paid.
Suggested reading: Two Great Reasons to Save Money During Inflation
Do You Have to Save Every Month?
Although saving every month works best for most people, it’s not the right choice for everyone.
For some people, saving more frequently, like every week, is the better option.
For example, a weekly savings plan is the best option if you’re getting paid weekly instead of monthly.
The key is to save at the same frequency as you’re getting paid.
This also applies if you’re getting paid less frequently than monthly. For example, if you’re getting paid quarterly, you should set aside a large chunk of savings right after you receive your pay.
If you have varying pay, i.e you don’t get paid the same amount every month, this is what I would do:
Figure out your living expenses. Every month/week/quarter you earn more than that, you save the leftovers!
For example, when I was 20 I worked a sales job, which paid depending on my results. This made me utilize the strategy mentioned above.
I managed to live off of $1,300 a month, and earned somewhere between $1,100 – $2,000 a month.
In the months I earned $1,100 I could not save anything. In fact, I had to draw from my savings to survive. However, every single month I earned above $1,300, I would put every single penny left into the savings account.
This way, I was able to grow it consistently, even though some months I had to draw from my savings.
Most people should save every month, but you don’t have to. Try to save at the same frequency as you’re getting paid.
Suggested reading: This Is How Much Money You Need to Retire in Switzerland
Stop Thinking About When to Save/Invest, Just Automate Th Process:
There’s no need to worry about the timing of savings. Ideally, you should not be thinking about it at all.
There’s a podcast/youtube channel I really like. Below you’ll find a great video about automating your way to financial freedom and retirement:
suggested reading: Is Saving 20% Of Your Income Enough?
Conclusion: Save at The Frequency You’re Paid
If you’re paid every month, you should save every month. If you’re paid weekly, you should save weekly. It should all be automated, and you should not even have to think about it.
In summary, you should automatically save at the same frequency you’re paid at.
You might also use this strategy for investing. For example, you can automatically invest 40% of your leftover pay and save the remaining 60%.