How Much Should I Really Save? | Cleveland Bradley County Teachers Federal Credit

We all know that when it comes to finances, the more we can save, the better. But what does that really mean? How much should we be saving and what should we be saving for?

Of course, there is the future to think about. The days when you are ready to be done with work and take total control of your own schedule require saving enough to survive without steady income. There are also emergencies to save for, and of course, saving for the kids’ education, and there is that big vacation you always wanted to take, and…and…

When you start to break it down, you can see there are really an endless number of reasons to save money. Life has regular expenses, though, so let’s take a reality check on what you should really have in the bank.

Savings at Every Age

Planning for the future is one of the biggest reasons behind savings. A future trip, a future journey into higher education and perhaps the most important—retirement.

It is never too early to start saving for the days when you work no longer, and when you are able to set attainable savings goals at various different ages, you can build a comfortable retirement easily.

One of the most popular ways to budget and include savings is the 50/30/20 rule. This type of budget dictates that 50% of your income should go to your everyday necessary expenses, while 30% goes toward discretionary expenses and 20% goes into savings.

This is a great starter budget for someone who has just stepped into the working world, as it can easily be adjusted (think 70/20/10). To create a habit of saving, automate a certain amount of money to drop directly into an account you have little access to from the time you get your first job.

As your income fluctuates over the years, so too should how much is flowing into your savings. Aim for 20% when you are just starting out and have fewer responsibilities, but be OK with 5% in the middle years while you raise a family. Once the kids are grown and you are closer to retirement age, shift your savings to the highest proportion possible to build your account quickly.

Savings Priorities

Saving at every age is crucial to build a solid base you can rely on, but as life ebbs and flows, savings can feel like an expense you just can’t justify. If you hit a life point where you feel like there is no way you could possibly set any money aside, instead of ditching it altogether, consider reprioritizing what you are saving for.

Emergency funds and retirement are two areas you should never give up on. Even a small amount of money in the bank to fall back on can really be a lifesaver the next time a curveball comes barreling your way (or through a car window for a literal example). You should keep $100–300 in cash on hand, and at least $1000 in the bank at all times.

If your retirement plan is connected to your employment, consider backing off any additional funds you have flowing into it and only direct the amount required to meet any offered matches. This can help you get out of a tight place without stopping the savings altogether. Make sure to bump it back up as soon as you are able.

Savings will always be the name of the financial game, but it doesn’t have to be a hard game to play. Every dollar you are able to set aside matters. Start early, and build yourself the future you want.

Want other tips about how to save for everything you need? Contact us to build the perfect future.