How much should you save every month?

With bills, insurance, monthly expenses, retirement and more, how is there anything left to save? And if there is any money left, what do you save for and how much should you be putting away? We’re here to help answer these questions! Here is how much you should save every month. 

50/30/20 Rule 

You may see a lot of recommendations for saving 20% of your income every month. According to the popular 50/30/20 rule, you should reserve 50% of your budget for essentials like food and rent, 30% for discretionary spending and at least 20% for savings. But it’s not always that simple sometimes. If you earn more money, then 20% makes sense for you. But if after calculating your budget and 20% just isn’t within reach, don’t get discouraged. Saving something is better than nothing – so try for 10-15% if possible. 

Automate your savings so you don’t have the choice to use that money if it goes straight to a checking account. If you get a bonus or raise, put that straight towards one of the below items. You were okay without that money and getting by so put it towards savings instead of into your pocket to spend. 

Retirement 

Saving for retirement should be started as soon as possible and is a lifetime goal. Saving younger means you’ll have less to save each month than if you start later. A general rule of thumb is to have one times your income saved by age 30, twice your income by 35, three times by 40, and so on. Try to save 10-15% of your salary for retirement. Increase by 1% in savings each year until you can get to a number close to that. 

Emergency Fund

You may think you are okay and don’t have to worry about a large emergency. But if your furnace and a/c go out, you are out $10,000 in supplies and labor right there. You may not have that big of a cushion to fall on if you thought your emergency will only cost $1,000. Your emergency fund should be 3-6 months’ worth of expenses which includes your monthly expenses and salary so you would be covered if you were to lose your job. We know that seems like a lot but slowly work towards that over the years. 

Family 

Think about what you want to save for regarding family. Do you need a new car to fit your growing family, will you be helping your child pay for college, are you going to take a family vacation, or do you just need to save for the overall cost of having a child? Thinking about your future and the costs that you will incur regarding family should be added into a savings plan. 

These are some of the top things you will want to save for and how much you need to save for each! If you need to place your savings in a savings account, CD/IRA or checking account – we have you covered. 

Exchange Bank of Northeast Missouri

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