How Much Should You Have in Savings
How much should you have in savings is not static, it is dependent on your situation. For instance, if you have multiple sources of income, you will need to have more savings than someone with just one source of income. There is no specific answer to how much you should have in your savings.
The amount you should have saved is also dependent on your budget and your goal for saving. You alone know your budget and your financial situation more than anyone, so you will be in the best position to determine how much you need to save.
To figure out how much you need to have saved, you need to have a reason for saving. But the general recommendation on how much you should save is three to six months’ worth of your expenses.
Also, know that this is still determined by your lifestyle. No one is too old or too young to have savings, and no matter what stage you are in your life, it is necessary to have a savings account.
How much Should you have Saved
This answer is dependent on the reason for your saving. It implies that your reason for savings will determine “How much should you Have in Savings”.
- Savings towards retirement will require 10 – 15% of your income. In order not to go broke after your retirement, you will need to save up a good amount of money. And know that no matter what stage you are in now in your life, it is never too late to start saving. You can also join a reliable retirement program to aid your savings.
- If you are saving for an emergency, you will need to establish an emergency fund that can cover up to 3-9 months of your living expenses. This amount can also be adjusted to fit your family needs, job stability, bill obligation, and any other factor. The truth is emergencies are not predictable, so any act of emergency like an accident, illness, or job loss can affect your finances drastically if you are not fully prepared for, it.
- For personal savings, you will need to add up your monthly contribution to your emergency and retirement fund, then subtract these funds from your income. Then from the remainder, you should set aside a good amount of money that will be enough to satisfy your daily needs.
Tips to Engage in Saving
Asking how much should you have in savings is great but some tips help you get the best out of your saving, they are listed below.
- Consult a financial expert.
- Create a budget.
- Schedule your savings.
- Consolidate debt.
- Save through different mediums.
- Create separate accounts.
Consult a Financial Expert
When making plans on how much you should save, you should consult a financial expert. This is because the financial expert will help you get a good savings plan based on your current financial situation. And this will enable you to grow your account balance and your retirement savings.
Create a Budget
You also need to create a budget for saving. Creating a budget will enable you to know where your money is and what you spend your money on every month. This will in turn help you to cut down on spending and increase your saving.
Schedule your Savings
This means allocating an exact amount of money from your monthly allowance to your savings account. This will ensure that you meet up with your savings every month.
When you consolidate debt to a lower rate, it will help you in saving money, help you to reduce your overall payment every month, and help you contribute to your savings account.
Save Through Different Mediums
Saving through different mediums like certificates of deposits and money market accounts will give you steady returns that you can channel to savings and it can protect you from market fluctuations.
Create Separate Accounts
Creating separate accounts will enable you to keep your savings untouched.
How Much Should You Save in a Month
Determining how much to save monthly is kind of challenging. How much should you save monthly is not static. It is dependent on some factors like;
- Your saving goals.
- Reason for saving (long-term or short-term goals).
- Your monthly income.
- Your lifestyle.
The 50/30/20 rule is a great way to split your monthly income. It states that you should give 50% of your income for essentials like gas, groceries, and housing, 30% for your wants, and 20% to your savings.
But on a general note, it is better to save 10 to 20 percent of your income each month. And sometimes the 20% rule is not always suitable for everyone, so if you cannot save up to 10 or 20 percent, you can save whatever you have. You need to look at the factors above to determine what you can save.
How to Make Saving Easy
To make saving easy, you need to:
- Pay off auto loans, credit card debts, and other debts.
- Save up to three months’ worth of your living expenses. It is needed in case of emergencies or loss of job.
- Invest your money wisely. You can do this by investing in stocks, bonds, and real estate.
Paying off debts and loans, saving up to three months’ expenses, and infesting your money will make saving easy for you.