How much should I realistically be aiming to save?

[wallpainting]

If I’m 26 and earn £3,500 a month after tax, student loans, and 13% pension (both my and employer contrib). What should I be aiming to save?

My rent and household bills are £1,200 a month.

What detail would you like? 😁

What are your goals ?

If you can afford to, at least 20% of your take home pay (£700 per month), split across savings and investments. If you’re saving for a house deposit, cut back on spending and save a higher % and concentrate less on long term investments for now.

It depends what your goals are, plus your other outgoings.
It might be that you save £1500pm, £1000 in long term savings towards a property and £500 in short term towards occasional spending (holidays, Christmas etc).
But they might not work for your outgoings and wants!

So you are left with £2,300 after bills

Is that for only transport, food and hobbies?
Break these costs down per month.

For example:
Transport - £200
Food - £175
Hobbies/gym/going out - £250
clothes ?
gifts and holidays?

Then i would save most of whats left.....around £1,500 maybe?

Once everything is accounted for, everything, bills, petrol, shopping, lunch, some money for annual bills, what lefts is spending money, half that and put it in your savings, the other half to spend.

So there are 2 ways of looking at this.

Either you have a particular savings goal e,g, house deposit, car, holiday away, rainy day fund etc, work out how much you need to save for that and how quickly you want to save it, and then save accordingly (if the amount you need to save is more than the money you have, you obviously have to adjust your expectations accordingly).

Or you look at the money you have, what you need to spend it on (rent, bills, food ...) and what you would like to spend it on (going out, holidays, nice things ...) and see how much is left. Then you put that amount of money in savings.

You also need to factor in whether you are a saver or a spender. The second option suits spenders better, and the first option probably suits savers.

Or you could just live your life how you want, and see what money is left?

I've read a lot that a good rule of thumb is 50% of take home pay for needs (rent, bills, groceries, transport) 30% for wants (shopping, eating out, holidays) and 20% for savings.

I am the same age and have the same pensions conts but earn £2k after tax and my bills are £750, then I save £500 so 25% of take home. Seems reasonable to me that you could do the same so £875 but I'd probably be aiming for more like £1,250 ish depending on how much 'spends' you want leftover, I manage pretty nicely with £750 leftover each month but have minimal travel costs and have a strict food shop budget.

Depending on your other outgoings and lifestyle, you could be saving close to £2000 a month! I'd think about £150/month on food if that's not included in your bills already, then another £200 potentially on things like birthday presents, events, clothes...just depends how often you do these things and how much you want to save vs making lifestyle changes - you might choose to spend a lot more than this, you might have umpteen subscriptions and a health club membership. Also not sure if you have additional car or public transport costs outside of the above, or if you work from home and have neither.

Total up what you normally spend and what on, think about where you could cut back. Save as much as possible at this early stage of life and you'll reap the rewards later. Remember it's a choice though - it's not necessarily about saving what's left over from what you currently spend. You could choose to spend less in some areas in order to save more. You have to weigh up what's important to you.

With income like that though, at this age, I'd recommend looking up FIRE as you could save a lot of money now (and potentially invest some) and end up paying off a mortgage and retiring much earlier in life. I've never had disposable income even close to that but I still apply some of the principles to hopefully shave a few years off my working life (I won't be able to retire in my 40s, but you might)! It's worth looking into.

Sounds like you will be paying 40% tax on some of your income? I'd increase your pension contributions so that is either eliminated or signatifciantly reduced - its free money.

After your bills and essentials (rough 33% of your take home) and aim to save/invest 40% maybe and whatever is left use as fun money. You are in a fantastic position to secure your financial future by being clever today. I'm not saying dont spend your money or enjoy yourself, but pay your future self now and it will be a hell of a lot easier giving you more flexibility in the future.

This, wish someone had told me this at 26.

Save 3- 6 months expenses in an emergency fund. Then if you don’t already have a house and you want to buy one , start to save for a deposit. There are savings calculators on MSE which can help you work out how much and for how long you need to save per month to reach your goal.
That’s an excellent salary- you will have a very comfortable life if you are sensible with it.