I’ll give you the straight answer for this and its simply at least 20% of your income. Now, why should you continue to read this? Gotta another answer for ya!: “There is the knowledge of what to do and then there’s the doing”. Most of the time we already know the answer but we need help putting it into action. I want to give you some resources to get there. I’m looking at 20% of my income thinking “How?” And “When?” Just to be more picturesque, I’m thinking about it right now looking at my current paycheck on my phone. I’m so “SMH”-ing about this whole thing but I believe its possible.
Saving sidetrack (because that’s how my mind works)
You see guys there is this thing called mindset. Letting it enter your mind and reside there as a part of you. I like to think we will do things based on seeing ourselves doing it. Keep in mind we all need to save money for certain… Click To Tweet
My dream savings goal is to save 50% of my income. It’s way more than 20% and a big goal.
How much should you really be saving a month? That depends what are you saving for?
Where did this 20% come from?
This number means a lot of things and I believe it starts as being essential. Low income or limited income might consider this still too hard, but it’s a goal to strive for. Ideally, 20% can be a smaller number if you break it down again and again in smaller amounts. If you looking to have money for retirement 20% is minimum you should put away for a nest egg. You can find this mentioned as well in Senator Elizabeth Warren ‘s coined 50/30/20 rule, 20% is the savings.
What are you saving for?
There’s a reason why you’re intrigued by this post about you how much you should be saving. We, including myself, haven’t gotten much far in this department. In fact, we want to save but we need to know why that’s when they get the how.
The trouble with saving sometimes is that it needs a purpose. Some people might just save just to save, but I don’t think that tactic will last. When you figure out what you want to save for, it’s easier to take steps to achieve that goal. Ask yourself is this a short term saving goal or a long one? What is the dollar amount that I need by then? (This is the homework part, lol).
How much should I save for my Emergency Fund?
An “Emergency fund” also known as the “Rainy day fund” which is similar to having an umbrella as protection. The rain in this instance is surprises that show up at its least expectancy. If you put aside some income for these surprises your umbrella keeps you covered. How much of an emergency should you have? One thousand dollars is a great amount to start your fund. Accredited to Dave Ramsey, $1000 for emergencies is Baby Step1 from his book The Total Money Makeover. This book is one of many in my personal library, I love the no-nonsense approach to getting financial peace. There are take a step by steps approach es to winning financial freedom and ultimately debt-free!
After the success of that first crucial next egg of $1,000. The next step would be to eventually save 3 to 6 months of expenses. The additional step in security in case life was to intervene as it does. At this point might not be able to work. There might be a medical emergency or a life-changing event that will occupy your time and your wallet. Times your expenses by 3 or 6 months to get that amount that you need to save. If you’re an exceptional saver you get at this quick after saving your first $1000. Depending on your income you might want to stretch this goal out for a one to two-year saving goal. Once you’ve accomplished one goal transfer your focus on saving for something else. What can be the next step? If you guessed retirement you might be right.
What is the minimum amount for retirement?
The average American household generally makes between 45,000 to 75,000 a year. The scale can vary in those numbers due to unemployment rates continuing to increase. As a result the trend of lost jobs creates more debt, so I know saving is hard. I would like to start by telling you to start small and work your way up. What can you put aside now that you probably won’t miss it? An amount you know if you didn’t save it you’ll spend it anyways. I’ll give you a tip, look at last month’s bank statements. As you scrolling down your statement can you pick out an amount that was a total waste? We’ll save the same amount this month. I call it spending redemption.
There are just some readers that need more of the facts. I hear you clearly, lol. What should you be putting away every month for the longterm? If you building great savings for retirement, you should put aside $500 to $1,000 aside a month. Depending on your age you might want to be more aggressive in saving more than that.I like to calculate the numbers by your yearly expenses. How much money do you need to survive on by retirement age? Times that by however many years. Click To Tweet
How much should you be saving? I think you know the answer to that now. We made it obvious in the beginning, but now it’s deeper than that. The main thing to take from this is that you need to know what your reasons are for saving to get into tactics. After your purpose is clear, get working towards your goal.