Americans are backbenchers when it comes to saving money. On average, an American only saves 5% of his income. Statistics is really alarming. Half of the household are living their life living on paycheck to paycheck and, out of that only, 24 % of millennials have basic financial knowledge.
You don’t need stats to know your condition, just look at your bank statement for once and you will face the truth. There is no denying over the fact that we don’t save enough. According to USA Today, a recent study shows that 35% of American admits spending more than what they can afford.
You know what? We get it when you are in your 20’s; spending money on yourself is all that you want. A small getaway, a little pampering, and takeouts to lower your stress, these small expenses that we tend to overlook, is what sinking our ship.
A simple fact that is hard to learn is that the time to save money is when you have some. Unless you plan is to get rich by finding a bug in Google, you need to make a plan and executive it through-out your lifetime. You need to know how much money can be saved at every age. That way you can live the way you want without worrying about the future.
Money to be saved in your 20’s
Your 20’s is the decade where you decide on your journey. During the initial stage, you are fresh grad whose main aim is to enjoy today and worry in the future because, you know, YOLO. But if you literate yourself enough, these habits can later put into good use.
Save 25% of your income, follow the rule and if you are on the right track you will have somewhat $10,000 -$16,000 in your account.
One easy way out is to have two accounts. One for salary and one for savings. Shift 25% at the start of the month and don’t apply for any credit or debit card or e-banking for the saving account. That can really help you to reach your checkpoint.
Money to be saved in your 30’s
Your 30’s is the time where you’re aware of difficult terms like retirement, Roth IRA, 401(k). You are planning out your financial journey, responsibilities are not that high. This is the time where your salary takes ascent. If you earn a median salary of 35-40 year old, try to save at least 2x of your income.
Money to be saved in your 40’s
You 40’s are going to have a complicated financial journey. Your increment will start losing its momentum, your expenses are much higher than you expected. But the positive part is that between 40 -50, you have developed the art of saving money.
The best plan is to save 3x of your income till 45 and then push yourself for a 4x till your 50. The better you are at your saving; the easy is your life after retirement.
Money to be saved in your 50’s
Your 50’s is the part when you seriously start thinking about retiring. You might have a certain age plan in your head. Now’s the time for the final sprint. You can push yourself for 6x to 10x and above of your income. You are fully aware of your spending habits; your expense will go down comparatively. So pushing yourself for an extra 1x would not be as difficult as it seems in your previous decade.
Money to be saved in your 60’s and beyond
Till your 60’s you have saved your cash, beyond this benchmark lies the life that you have planned all along. To make sure that your hard earned money doesn’t go waste, start investing the money in more stable terms like bond and CDs. Investing your money will ensure that you can still multiply your retirement saving for the next handful years.
How to save money
If you are not sure where to start from, just remember these 3 numbers 50-30-20. 50% of your income should be used on your need which can be your loan, rent, monthly utilities, and food. The basic payment that you really need to make every month.
30% goes into your personal expenses. Shopping, travel, takeaways, gifts and all the other leisure activities you choose. This 30% bar varies according to your expenses you can cut it down to your like, just remember to not to cross above 30.
20% of your income goes into saving. Whether it is in the form of saving in account or investment in a bond, save this amount for future use.
Save money with Apps
Apps like Digit, Acorns, and Chime help you to earn cash back and bonuses. You can improve your saving and spending habits. Making it easier for you to save that extra penny.
If it was such an easy task to follow the rules, there shouldn’t be an infinite article on saving money. Sometimes you will see yourself not making the cut and other time you might save more than what you expect.
All you need to make sure is that you remain close to your goal and never stop saving. It is not about 15%, 20% or 30% rather how you imagine yourself in the upcoming years. So if you want to live with your inner peace, start saving now because even a fool can earn money but it takes a wise man to save and dispose of it to his own advantage.
Shubhi is an aspiring writer who enjoys writing articles that help people find new ways to improve their finances as well as on budgeting and money making ideas. She is a well- researched and knows how to spot trends, providing invaluable insight to her readers. Shubhi’s biggest talent is her ability to inspire, and the medium she chooses for that outlet is her writing. When not working, you will find her traveling, reading and learning new things so as to evolve her ability to write a story that keeps you reading.