It’s important to have savings but it will be difficult if you don’t have an income or a paycheck. However, a lot of people especially those working have been asking themselves the question how much should I save from my paycheck?
Well, the answer to that question depends on what you are saving for, how much you intend to save, and the amount of paycheck you receive each month minus expenses, then you can be able to calculate how much you should be saving.
Unfortunately, there is no actual percentage of how much you should save each month. Many experts suggested somewhere between 10% to 20% of your monthly paycheck, but that’s not a golden rule.
Here’s a look at some of the potential answers to this question, and the steps to get started. Without wasting much time let’s dive into that.
How Much Should You Save Every Month From Your Paycheck?
If you make $50,000 per month, you’ll need to save at least 20% of your income each month. That means you’d need to set aside $10,000 each month. If you’re single, you’ll need to put away more than that because you won’t have anyone else to support you. If you’re married with kids, you’ll need to set aside even more.
How should I split my paycheck Into savings?
The amount that you wish to save depends on how much you earn, what you are saving for, and whether you’re married or single. These factors will determine how you should split your paycheck in most cases you should consider the 50/30/20 rule. 50% of net pay for needs, 30% for wants, and 20% for savings and debt repayment.
What Percentage of Your Income Should You Save?
According to experts, you should save at least 10 to 20% of your paycheck this will give you a cutting edge. Statistics have shown that most Americans live paycheck to check without having enough to even save for the future.
How to Save Money From Your Paycheck
In other to know for sure how much you should save from your paycheck you have to consider these tips:
- Break Your Paychecks Down: Here you analyze how many paychecks you receive each month and your expenses each month this will give you a clearer view of how much you should be saving.
- Evaluate Your Budget and Expenses: Now what is your budget like? are you saving to build a house? how much does it cost? these are the questions you ask yourself before starting a saving plan.
- Minimize Debt Expenses: This here is a key factor, you must minimize debt expenses in other to save. How can you save if you are owing a lot of debt or your expenses each month are greater than your paycheck, you will find it nearly impossible to even save for clothes, so it’s important you pay close attention to this.
- Find Ways to Earn Extra Cash: No doubt, you need cash in other to save. Making extra cash from a side hustle will help keep your saving plan on track and even makes it faster unless maybe you are saving for retirement which means saving for years.
- Set Up Automatic Transfers to Your Savings Account: Lastly set up an automatic transfer. This right here is all you need, once you know how much you need to cover your bills and expenses, you can set money aside from your paycheck to put toward your savings. You can do this by setting up a direct deposit into your savings account from your paycheck.
How much of my paycheck should I save for Retirement?
If you want to retire early, you’ll need to save at least 15 percent of your income each year. That’s because if you don’t save enough money, you won’t be able to afford retirement living expenses. And if you don’t have enough saved, you could end up working well into your 70s.
What should you Save for
There are so many reasons you should consider saving, this is a vital approach to wealth creation.
1. Emergency savings
It’s important to have an emergency fund set aside to cover unexpected expenses, like health issues or an emergency trip. This might not seem important but don’t get caught up in such a situation.
Ideally, your emergency fund should contain enough money to cover three to six months of expenses. The Bureau of Labor and Statistics estimates the average household spending in 2020 was $61,334, or $5,111 per month
2. Short-term cash savings
Short-term savings is a savings set aside for a specific occasion or purpose, such as wedding planning, vacation, family gathering, and Christmas treats. This savings lasts within a short period maybe 1 to 2 years.
3. Retirement savings
Saving for retirement is another important aspect. Although there’s no fail-proof predictor of how much money you should save this solidly depends on how you choose to spend your retirement and how much you are hoping to save.
However, experts say your retirement income should be about 80% to 90% of your final pre-retirement annual income.
4. Other Investments
Other investments or savings refer to those plans you wish to execute in the nearest future maybe you want to have some assets, a stock, a small business, or you wish to invest in a release. It is important you start saving while you can. Keep a portion of your paycheck for that investment, remember it will yield you more profit in return.
5. Splurge and fun savings
Well, this may not sound like a priority but you should consider saving for fun maybe to buy that car you’ve always dreamed of or that house. If you develop the habit of savings you will be amazed at what you have accomplished within a short period.
Now you know how much you should save from your paycheck, don’t forget to apply the 50/30/20 rule this will be a constant reminder of how much you should take out each month and help you stay on track.
Many experts suggested somewhere between 10% to 20% of your monthly paycheck, but that’s not a golden rule.
If you make $50,000 per month, you’ll need to save at least 20% of your income each month. That means you’d need to set aside $10,000 each month.
According to experts, you should save at least 10 to 20% of your paycheck this will give you a cutting edge
If you want to retire early, you’ll need to save at least 15 percent of your income each year.
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