How Much Should I Save Each Month? – Forbes Advisor

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Most people know the importance of saving, but deciding how much to save each month is less clear-cut. The answer to this question depends on your personal circumstances. Thankfully, general guidelines can give you a better sense of how much you should be saving.

How Much Should I Save Each Month?

There isn’t a one-size-fits-all answer to how much you should save per month. It depends on factors such as your age, income and goals. However, the “50/30/20” approach can give you a general idea of how much income to stash away in a savings account.

This popular rule of thumb suggests you spend 50% of your after-tax income on needs (such as housing and utilities), 30% on wants and 20% on savings and debt repayment.

Let’s look at how that breaks down for someone with a monthly after-tax income of $4,000.

  • Needs: $2,000 (50% of income)
  • Wants: $1,200 (30% of income)
  • Savings and debt repayment: $800 (20% of income)

Like all financial advice, the 50/30/20 method won’t work for everyone. Saving 20% of each paycheck may be too high for some and too low for others. If you’re new to your career and living in an expensive area, you might not be able to achieve that percentage until you get a few raises. And if you’re behind on retirement savings, you’ll probably want to save more than 20% of your income to catch up.

You can play around with a savings calculator and plug in the exact numbers to see how long it will take to achieve your financial goals.

How To Increase My Savings Each Month

Boosting your savings rate requires you to increase your income or decrease your spending. If you can do both, even better. Here are some ways to do…

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