Only a few people have an appropriate amount of money in their 20s. The 20s involve reckless spending, risks, and low earnings. However, it’s in the 30s when you must buckle down and get serious about your retirement savings. Here, we will discuss how much money you should have saved in your 30s for emergencies and retirement.
Your retirement savings are a cushion to land on once you stop working. This is to plan ahead and is essential to living a financially stable and worry-free retirement life. Most of your retirement savings will be decided in your 30s.
Ideally, the money you have saved should be equal to your annual salary. If you earn $60,000 a year, you should have saved $60,000 in your 30s.
This might seem undoable, but it’s not only the money in your savings account. The total amount you have for your retirement savings includes any investments, properties, or stakes. This is why it is more beneficial to invest the money rather than keep it in a savings account.
While the 20s are more reckless, the 30s are when you must think ahead. Emergency savings offer a cushion for unforeseeable events and give you time to stand back up.
Ideally, you should have six months’ worth of living expenses saved by 30 for emergencies. This sum is kept away for any dire situations, such as losing your job, having car troubles, needing urgent home repairs, having hospital bills, etc.
How to Save More Money in Your 30s
In your thirties, you still have a few more decades in the workforce, so you can start now even if you are not close to the ideal amount. Below are some tips on how to save money in your 30s.
Focus on Emergency Savings
Emergency savings are essential in a financial crisis, even more so if you have a family. While saving money for retirement also includes investments, having your emergency funds in a savings account is good.
While saving accounts only earn a little interest of less than 1%, you will still have readily available funds without urgently liquidating your assets.
A 401 (k) and a Roth IRA are Equally Important
While your company will offer a retirement plan and make similar contributions as you, you must save enough to receive a full 401 (k). Moreover, you can also add funds to an individual retirement account (IRA) if you have money to spare.
Pay Off Any Debt with a High Interest
Debt with high interest is a liability that sucks away your money the more you let it stay. Therefore, paying the debt off first is essential so you can focus entirely on effectively securing funds for retirement and savings.
Take Planned Risks
Since your retirement is still a while away, you can take some risks with your money. Invest a small percentage of your earnings in stocks and similar investment opportunities. These investments become part of your savings and can also help you earn a profit.
Start Saving Today
Facing challenges coming up with an appropriate strategy to save money? In that case, Maggi Tax can help you develop proper income planning for your emergency and retirement savings. With over three decades of experience and well-trained professional staff, you can count on us to get you where you need to be financially.
Come visit us at our offices in Florida or call us at (727) 799-1701. You can also fill out our form online and contact an experienced agent to help you.