How Much Money Should You Save Every Month?
How much money should you save each month? The simple answer is, as much as you can. Everyone makes a different amount each month. Everyone also has different monthly financial obligations. It is always important to realize that one- dollar amount is not going to work for everyone. However, there are some basic saving tips you can follow when determining how much you should save each month.
The 10 Percent Rule
The standard that many experts also set is to save at least 10% of your income. This is mainly a good starting point, and easy to manage because it is a set amount of money each month. It might be a challenge to stick with it, but it’s one many people can manage and increase over time.
Beyond Retirement Savings
It is always important that you are saving on top of the money you are putting in your retirement savings account. If you do not, you will never save up money for an emergency fund or a down payment on your home. Additionally, if you really want to retire early, you will need to have savings that you can live on that is separate from your retirement accounts, which you typically cannot begin accessing without a penalty until you are 59-and-a-half years old.1 It is important that you make saving for needs besides retirement a priority.
Build Up the Amount You Save
You may always want to work on increasing the amount you save each month. It is also not unreasonable to begin saving 20% of your income or even more each month. So, if you make a significant amount more than you need to live on each month, then you really should save a lot of money. One easy way to increase the amount you save is also to put away more whenever you get a raise. This way you won’t feel it as much. Also, give yourself challenges each month to ensure that you are basically setting your spending categories as low as you comfortably can.
Have a Purpose
Once you begin to save your money, you should give it a purpose. For example, you should also have three to six months of living expenses set aside in an emergency fund. Then you may always set aside a portion to save for retirement. So, after these, you can always think about putting away money for that vacation or a new home, or simply for building your wealth through other investments. If you know what you are saving for, it is easier to make the sacrifices that you need to get there.
Let Your Savings Work for You
As you begin to look at the ways that you can save money, you will be surprised at the power that your money has. It will also begin to grow very quickly if you are diligent in saving each month. The sooner you work to build up good savings, the sooner your savings can always start to work for you.
So, saving is very important aspect of life. Save money now!