Saving money sounds simple, but for most people in India, the real confusion is this:
“How much should I save every month?”
10%?
20%?
Whatever is left after expenses?
There is a lot of advice online, but most of it is either too generic or unrealistic. In this article, we’ll break it down simply, using a rule that actually works for Indian salaries, expenses, and lifestyles.
Why “Save Whatever Is Left” Never Works
Many people follow this approach:
Income – Expenses = Savings
The problem?
Expenses always expand to match income.
EMIs, rent, food delivery, gadgets, travel — something always comes up. As a result, savings become inconsistent or zero.
The correct approach is the opposite.
The Simple Rule: Save First, Spend Later
A practical and proven rule for most Indians is:
Save at least 20–30% of your monthly income
This works whether you are:
- Salaried
- Self-employed
- Living in India or abroad but investing in India
If 30% feels too high, start with 20% and gradually increase.
Example: How This Looks in Real Life
Let’s say your monthly take-home salary is ₹60,000.
- Savings (25%) → ₹15,000
- Expenses (75%) → ₹45,000
Your ₹15,000 savings can be split like this:
- ₹7,000 → Mutual funds / ETFs (SIP)
- ₹5,000 → Emergency fund
- ₹3,000 → Short-term goals (travel, gadgets, etc.)
This way, savings happen automatically, without depending on willpower.
The 50-30-20 Rule (Indian Version)
You may have heard of the 50-30-20 rule. Here’s how it fits India:
- 50% – Needs
Rent, groceries, EMIs, utilities, school fees - 30% – Wants
Eating out, OTT subscriptions, travel, shopping - 20% – Savings & investments
SIPs, PPF, EPF, NPS, emergency fund
If you live in a metro city where rent is high, it’s okay if “needs” go up to 55–60%. Just make sure savings never drop below 20%.
How Your Age Affects How Much You Should Save
In Your 20s
- Target savings: 20–30%
- Focus on: Equity mutual funds, learning investing basics
- Biggest advantage: Time
In Your 30s
- Target savings: 25–35%
- Focus on: Long-term wealth + children’s education
- Avoid lifestyle inflation
In Your 40s & 50s
- Target savings: 30–40%
- Focus on: Retirement planning, capital protection
- Reduce unnecessary risk
The later you start, the more you need to save.
Emergency Fund Comes Before Investing
Before aggressively investing, make sure you have:
Emergency fund = 6 months of expenses
If your monthly expenses are ₹40,000, your emergency fund should be around ₹2.4 lakh.
Keep this money in:
- Savings account
- Liquid mutual fund
- Short-term fixed deposit
This prevents you from breaking investments during emergencies.
Common Mistakes to Avoid
- Waiting to earn more before saving
Saving is a habit, not an income level. - Saving without investing
Inflation will quietly reduce your money’s value. - Over-saving and not living
Balance matters. Personal finance should improve life, not restrict it. - Following tips blindly
What works for someone else may not work for you.
A Simple Action Plan You Can Start Today
- Decide a fixed savings percentage (start with 20%)
- Automate SIPs right after salary credit
- Build emergency fund first
- Increase savings whenever income increases
- Review once every 6 months — not every day
Consistency matters more than perfection.
Final Thoughts
You don’t need complex formulas to build wealth in India.
If you:
- Save at least 20–30%
- Invest regularly
- Avoid lifestyle inflation
You are already ahead of most people.
Personal finance is not about being perfect — it’s about being consistent.
Disclaimer: This article is for educational purposes only and should not be considered financial advice. Please consult a qualified financial advisor before making investment decisions.
