How Much Money You Should Save

So many of us are wondering about this important financial questions of how much money we should be saving. It’s an important question to have the answer to, but the answer is not so simple. When it comes to how much money you should save, each person’s circumstances, goals and worldviews are different, which makes it difficult to give a one size fits all answer. Many suggest saving 10 % of your monthly income, but for some that will prove to be too difficult and for others, they have the ability to stock away a little bit more. There are a few guidelines that can help us to put things into perspective and decide what a good savings rate would be for ourselves despite what Mr Jones down the road is saving.

savings

The first thought to ponder on, is what are you saving for? There are so many different reasons to be saving money. You may be interested in a short term saving, to be able to afford your annual vacation. The amount you should be saving for this can be worked out quite easily, based on the cost of the vacation and how long you have to go before you’re required to make the bookings.

Perhaps you’re thinking bigger than just your annual vacation and you want to have some sort of nest egg for the unexpected emergencies, or a “rainy day? fund. On top of all this you may be thinking about saving for your retirement too, which when it boils down to how much you should be saving, has a lot of other factors that come into play.

So once you know what you want to save for, it puts your monthly savings into perspective. Now, you don’t only have to be saving for one certain thing. You could have a short term savings, a savings cushion and be saving toward your retirement all at the same time, and that is probably the best thing that we should all be doing! Covering ourselves and providing our families with financial security the whole way.

The second thing that impacts on the amount that we should be saving each month, centers on the stage of life that we are in. If you are in your 20’s, saving for your golden years, then you have room to play with and you won’t need to be putting away huge amounts of cash each month. As the years go on, and the closer you get to retirement age, you can increase your monthly contributions. But if you started focusing on your retirement later on in life, and it’s around the corner from your, then if you can manage it, your monthly savings should be as high as you can manage, in order for you to be able to maintain the standard of living that you’re used to, when you’re no longer earning.

Be smart about your savings, and whatever you decide, make sure that you are putting something away each month without exception!

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