Surely you at least once in your life asked such questions as “how much money should I save each month” or “how much money should I have saved by 30”. Despite the fact that at this moment it is difficult to answer unequivocally, savings are an important part of every person’s life as they help to have confidence that you have enough money to deal with any problem.
Average Savings by Age 30
Thus, as you already understood, saving is a must for anyone who wants to have a clear and bright future. Of course, the best thing you can do is increase your savings every month, but this can be quite difficult especially if you have not previously saved money. However, in any case, it is important to set a goal for yourself to save a certain amount every month. Even if you cannot save a certain amount per month, you need to save at least some, as this will bring you closer to your financial goal. Read on to find out how much you should have in savings.
Why Is It Important To Save Money under 30?
Nowadays, people strive to constantly increase their income. However, you should understand that as your income rises, so does your expenses. Thus, you should focus not only on how to earn more, but also on how to save more.
Many people continue to live from paycheck to paycheck and do not think about their future because it seems too far away for them. However, the truth is that it is much closer than you think. While you might be tempted to spend all your money to go out to a restaurant with friends or make a new unnecessary purchase, you should know that it is a mistake when you have no savings at all.
You will be surprised to know that according to research, about 80% of Americans do not have an emergency fund and live paycheck to paycheck. Moreover, even young people most often do not have either pension or monthly savings, which will undoubtedly soon negatively affect their future.
Think about what opportunities will open up for you when you have some financial reserves. You no longer have to be nervous and think about how to live from paycheck to paycheck, as savings will help you get peace of mind and financial freedom.
How Much Should You Save A Month? Average net worth of 30 year old
First of all, it is important to understand that the amount you need to save will depend on your goals, so it is difficult to determine the specific amount that you should leave every month. Thus, before you start raising money, you must define your goals and plans.
Think about what you want to get in the short or long term. Major goals include buying a home or saving for retirement. If we talk about short-term goals, then it can be a vacation, buying for a house, and so on. However, once you have defined your goals, it is also important to determine how you will achieve them through monthly savings.
A good plan to start with is putting aside about 20% of your income every month. This will be an impressive enough amount to see the result in six months, but at the same time, not so large as to feel the cut budget. This figure is recommended by experts based on the 50-30-20 budgeting method, where 50% are your monthly necessities, 20% are savings, and 30% are purchases and spenders. Thus, if your monthly income is $ 5,000; then you have to set aside $ 1,000.
You should also be aware that you will need to divide this $ 1,000 into the various purposes you want to cover. Part of this amount can go to the pension fund, part – for vacation, part – for other expenses.
How much should i have saved for retirement by 30?
As already mentioned, each person has his own financial goals, so it is impossible to say unequivocally why all people in general save money. Most often, many people set aside part of their income precisely in order to buy a house, have a retirement fund, pay for wedding expenses, and more. However, there is another important point why you should save money – the emergency fund.
An emergency fund is one of the best places to start your savings. In fact, every person at least once in their life faced an emergency situation and needed money. Many people take out a Payday Loan and find themselves in a debt trap due to extremely high interest rates. However, this situation can be avoided if you have an emergency fund. That way, if your car breaks down, your child gets sick, or you need to pay an unexpected bill, you have the money to do it. An emergency fund will give you peace of mind and the ability to focus on more important things than seeking immediate funding in a difficult life situation.
How Can I Save More Money Each Month?
If you have already set your financial goals, you need to change your financial habits in order to achieve the desired result. Explore options to help you save even more money than you imagined!
- Prioritize and write down your goals. If your goal is a priority for you, you must decide what you can give up in order to achieve it. For example, you can shorten your visit to a cafe, unsubscribe from certain magazines or channels, and more.
- Align spending with your values. Since your goal is your priority, you must learn to be frugal and weigh the pros and cons before making a purchase.
- Plan your meals. If you know how much money you need for food per month, you can avoid the emergency costs of cafeterias and fast food.
- Increase your income. Finding a part-time job will also help you save more as you earn more money and have more free money.