How Much Should I Save?

Many numbers are thrown around when talking about how much money you should save with all sorts of opinions. The real answer is different for everyone depending on your situation and ultimate goals, but the important thing is to start saving something. Start with 5% and, once you get used to that, bump it up to 10%. And, just keep on going up from there.

A guideline that I like is the 50-20-30 rule of thumb where the first 50% of your spending is for necessities, the next 20% for savings, and the final 30% for wants or lifestyle choices.

50% – Needs – home mortgage, rent, utilities, basic food and clothing

20% – Savings – emergency fund, retirement money, extra toward home payments, extra toward credit card debt, down payment for home

30% – Wants – vacations, fancy food and clothing, entertainment

Once you start saving money (or paying extra on debt), you’ll find it becomes part of your regular habit, and it’ll become easier and easier. You’ll find it exhilarating to see those debts go away and the savings amount piling up. It can get rather addictive! Change your habits so you can influence those around you, like your children, nieces and nephews, friends, etc. Wouldn’t it feel great to have such a wonderful impact on someone else’s life?