How Much Should I Save? 5 Things to Know About Your Savings Account
Read Time • 3 min
By Zipline Career Team • November 29, 2018
A recent study found that 65% of Americans have little or no money saved. So what happens when a surprise expense arises? Car repairs, medical bills, and other unforeseen expenses can cause big problems to those without an emergency fund. Whether you’re preparing to look for new employment, trying to make a big purchase, or just saving for a rainy day, saving money is a necessary and difficult task. So how do I start saving? How much should I save? Read on for the answers to these questions and more!
How Much Should I Save?
Most experts agree that a good goal for an emergency saving is 6 months of living expenses. That should include the cost of:
- Rent or Mortgage
- Car Payments
- Phone Bill
You can adjust this list to meet your needs. If you use public transportation then you won’t need to factor in costs like car payments, insurance, and gas.
This savings account will support you in the case of unemployment, but can also be used to cover surprise expenses like:
- Car Repairs
- Medical Bills
- Home Repairs
Having a savings account that covers these expenses will help you have peace of mind and be prepared for almost any financial struggle.
When Should I Start Saving?
The time to begin saving is right now! It doesn’t matter how old you are of how long you’ve gone without saving. Now is the time to begin. A good strategy for saving is to open up a savings account with the same bank you use for checking. If the bank you use has an app and you have a smartphone, download their app to make transferring money easy. Make a habit of transferring a set amount from your checking to savings account each time you get paid. And never stop. Saving should be a lifelong practice.
How Much Should I Save Each Month?
Recommendations on the amount saved vary greatly. The amount you save will depend completely on your current financial situation. Your minimum goal should be to save at least 10% of your income. Once you’ve reached a balance of 6 months worth of living expenses, you can re-evaluate.
Here are a few tips to consider as you decide how much to save.
- Decide on a set percentage of your monthly income and stick to it.
- Categorize all of your expenses. If there are some that are unnecessary, consider eliminating them and using that money for saving.
- Consider your financial goals.
- Anticipate large upcoming expenses (trips, car maintenance, surgeries, etc.)
Once you’ve saved at least the amount of 6 months of living expenses, you should consider other types of savings or investments so that your balance doesn’t lose value with inflation.
It’s never too late to start saving. You never need to ask “how much should I save?” ever again.
Now it’s time to pick a plan and stick to it so you can prepare for a more stable and comfortable financial future!
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