How Much Money Should I Save?
Saving money is always easier said than done. However, it’s not so hard to make the time to consider your savings goals and your options for reaching them. Start slowly, with our ideas for beginning a savings plan and general guidelines for how much you should be setting aside for each of your main goals, such as a vacation and retirement.
Incremental savings: How much do I save from my paycheck?
Here are your options.
- Save a set amount each week/month: Come up with an amount that you’ll put aside from each paycheck or on a monthly or weekly basis. It’s OK to start small – $20 per paycheck, for example – because even small amounts can add up over time. It's always better to save something rather than nothing.
carefully monitor how much you’re spending, you could probably be saving more. Out of all the options, however, this is one that can easily fall apart if you are not monitoring how much – if any – savings you are putting away.
Total savings: How much should I have in my bank accounts?
Another important factor is determining your end goals. Here are a few good benchmarks to consider:
- Emergency fund: Most experts recommend saving three to six months of expenses in an emergency fund in case you lose your job or get hurt and are unable to work. Your monthly expenses include your rent or mortgage, the cost of food to feed you and your family, monthly loan payments, and other essential spending. To be extra cautious, you may want to continue adding to your emergency fund until you can cover at least half a year of expenses.
The amount you’ll need in savings for retirement varies widely from person to person, but a number of free online calculators can help you determine how much you’ll need and how much you should be saving. Here are some examples:
Remember: small savings add up over time. Even if you can’t afford to save much right now, getting into the habit of putting money aside will pay off later. The key is being disciplined enough to stay with your savings plan, even if it only means setting aside a few dollars each week.Source: www.creditdonkey.com
Category: Personal Finance