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Learn How Much You Should Be Saving Each Year
Ready to talk to an expert?
Wondering how much you should be saving each year? Many specialists believe in the 50/20/30 budget: 50% is spent on necessary expenses (e.g. credit card bills, rent), 20% of your income is put into savings, and 30% is left for your luxury expenses (e.g. a new TV, restaurants).
By following this rule, you can comfortably begin saving for retirement or an emergency fund while having enough to make ends meet.
How Much Should I Be Saving?
While there’s no one-size-fits-all answer to how much you should have saved, there are some goals you should focus on during your 20s, 30s, 40s and beyond. Here’s a recommended savings road map to guide you at any age:
- 20s: Focus on building your credit, paying off loans and save something each month. Even if you’re not able to save quite up to 20% of your income, try starting at 10%.
- 30s: Allocate more money into savings, especially if you’re thinking about starting a family, buying a new home, or taking on a few home repairs soon. You should be putting at least 15% of your income into savings, if not more. Additionally, you should continue to pay off all non-mortgage debt.
- 40s: Get your credit card debt under control and up the amount you’re putting away into savings again. By this time, you should aim to have more than your current salary put away in savings.
- 50s: Max out your retirement contributions and pay off your mortgage. You should aim to have as much of your income and investments working towards your retirement goals as possible. Ideally, you have more than two times your current salary set aside in savings.
Start Saving for Your Future Today
Changing the way you spend can feel overwhelming at first and requires discipline. However, in time, you’ll get used to what is necessary and how much of your luxury expenses can be cut or limited.
Take charge of your finances and invest in your future. For more questions about how much you should be saving each year, or how to get started, contact your local First Bank branch today!
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Sources:
Experian: https://www.experian.com/blogs/ask-experian/how-much-should-you-save-each-month/
Huffington Post: http://www.huffingtonpost.com/simple-thrifty-living/in-your-20s-40s-60s-the-b_b_5686551.html
Money Under 30: http://www.moneyunder30.com/how-much-do-you-need-to-have-saved-for-retirement
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