The general guidance: 10-20%
Most financial guidance suggests saving 10-20% of take-home pay. This is a useful target but not always achievable — especially for people on lower incomes, high housing costs or with debt to repay.
For anyone with high-interest debt, repaying that first typically produces a better financial outcome than saving, because the interest saved usually exceeds any savings rate.
Priority order for your money
1. Emergency fund starter (£500-£1,000). 2. Workplace pension contributions (to capture any employer match). 3. High-interest debt repayment. 4. Emergency fund build-up (3-6 months of essential costs). 5. Medium and long-term savings goals.
How to calculate your target
Work out your take-home pay and essential costs. Anything left after essentials and debt minimums is your discretionary surplus. Aim to allocate 50% of that surplus to savings — the other 50% to discretionary spending. Adjust as your situation improves.
Small amounts matter
Saving £50 per month is meaningful. It builds a habit, grows your emergency fund and compounds over time. Do not wait until you can save large amounts — start with whatever is realistic now.