This is a tricky one because you have to balance your current life with what you desire in the future. Usually, one considers savings as what’s leftover from your earnings after you are done with spending it. However, it may be wiser to save first and then spend. In doing this, the part about looking out for your future is addressed and at the same time, you will be taking care of your needs today.

Working out how much to save might require some back and forth calculations. The key is to indulge in some budgeting and clearly quantify what your monthly needs are with respect to spending. Add on some amount for entertainment and fun. Now see what you have left. If nothing, then cut back on the wants and save the minimum you can.

If your income is going only towards your needs, then you have to work towards increasing your income or getting a side gig for additional income. Also, be careful about what you classify as a need or want. For example, an unaffordable housing loan EMI is not a need if you can get accommodation on rent in the same area at a much lower cost. Ideally, work towards saving at least 20%-30% of your monthly income and do it, first thing in the month rather than the last. If your income is not regular and comes in chunks, then you may consider saving slightly higher amounts to the tune of 30%-40%. Lastly, if you have specific goals that you have identified with a defined time frame, then it might require you to save aggressively and even cut back on some non-basic needs.

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