How Much to Have on Your Savings Account

The ability to save money is a behavior that every person should learn. Having money saved up for rainy days is critical for preventing embarrassing situations. Also, the money that is saved can be used to finance lifelong dreams such as vacations, anniversaries, and weddings. This article tries to give a road map for how much an individual should save in different stages of their lives.

How Much to Save as You Age

There is no magic number that defines the amount of money an individual should save as they age. However, the amount to be saved depends on several factors. The man factor is the amount of money an individual earns. Other factors include the number of dependents, marital status, social class, and geographical location. For example, a person that lives within a village may not have to save the same amount of money as the person that lives within a city. Likewise, a person that lives in a third-world country will not have to save up as would the person that lives in a developed country. Additionally, the amount of money saved at an earlier age affects the future.

Saving in the 20s

Saving money when a person is in their 20s is extremely difficult as this is the age when most people transition from being young adults to adults. In most cases, there is extreme pressure to spend, party, and keep up with the current trends. However, for does individuals that can save, saving 20% to 25% percent of their earners is a good way of building a substantial amount of savings for use later in life. For example, a person that gets $10,000 after tax should aim to save between $2,000 to $2,500. However, starting with 20% or 25% might be difficult for many. A good way to get started is to start with 5% or more while consistently increasing the amount to the desired percentage. A person that saves up $2,500 for 10 years will end up with $25,000 or more in savings when they are 30.

Savings in the 30s

A person that can save some money throughout their 20s will have a good foundation to build on. Although most people earn significantly more when they are in their 30s, most of their expenses escalate. At that period, many people get married, have kids, and buy homes. This significantly impacts their ability to save. Notwithstanding, an individual can still aim to save 10% to 15% of earnings after tax. Moreover, a person can use any excess money or bonuses to invest or save for their kids’ college tuition.

Savings in the 40s

Most people earn the most in their 40s. As such, this is the best time to payout debts, solidify retirement savings, invest as much as possible. Many people in this age bracket can save up to 30% of their earnings after tax. Additionally, it is always a good idea to get a financial planner or adviser at this point in life.

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