How much should I save each month?

There's a bigger question underlying here that has to do with the financial order of operations, meaning what do you do with each additional dollar - whether debt repayment, building an emergency fund, or long-term savings and investing.  

But let’s approach this assuming the case of someone with emergency savings to be able to handle unexpected expenses or a job loss. 

And let's narrow in to focus on long-term savings in an employer’s retirement account - whether a 401(k) or 403(b). 

If you get any sort of match from your employer - let's say they match any contributions you make up to the first 3% of your gross pay. You need to contribute at least enough to get the full amount of the match. That's probably not enough to support yourself in your retirement years.  But for folks who are just getting started, that’s a great place to start. 

Let's say you have done that and you figured out that it's not impacting your ability to pay your bills and maintain your current lifestyle. The next step is to ratchet up your contribution rate to a level that becomes noticeable and maybe a little bit painful. Maybe you go from contributing 3% of your pay, which gets the the full amount of the employer’s match, to 10%. And then you leave it in place for a few months and you notice that you're not getting as much in your checking account every paycheck, but it's not really impacting your ability to live the lifestyle you want. That's a good sign that it's an affordable amount. 

You can continue this exercise until your paycheck drops down to a level that becomes painful, and take your foot off the gas a bit.  

The end goal here is to ultimately contribute as much as you're able to with your employer retirement plan - up to the limit of $23,500 for calendar year 2025, plus an additional amount if you are age 50+. Getting to that level doesn't have to done be all at once. You can start with the method I'm talking about here, which is honestly how I did it myself - start small and increase your contribution rate until it's a little bit painful.  

Let’s say you also get 3-4% salary increases each year for cost-of-living or merit increases. When that happens at the beginning of the new year, go ahead and increase your retirement account contribution rate by a couple of percentage points. If you get a 4% raise, and you increase your 401(k) contributions by 2%, you're still getting more money in your paycheck than you did last year, but you're also steering more money into your retirement account for long-term savings. 

Savings is one of those areas of delayed gratification where it can be really hard to wrap your head around why you're doing it, and how to balance the current vs. the future. I think it can help to imagine your future-self perhaps not wanting to work as hard and having some flexibility after many years of working. 

But really, there's not a substitute for just trying it out - starting small, getting your employer match, and then gradually increasing overtime.  Before you know it, you’ll be shocked by how quickly the balance of your account adds up.  Both the amount of money that you're contributing and the balance of your account with growth.  

Following this path for a few years down the road, you'll be contributing as much as you are legally allowed to in a year.  Stacking up years and years of doing that puts you in a really good place.