No matter how old you get, everyone knows one thing for sure; money will always play a significant part in your quality of life. Lack of money can become an unavoidable hurdle when considering an investment, further education, or any other milestone you wish.
Saving a certain amount during important life stages can provide a safety blanket that keeps you secure. However, that is not to say that an inability to save means you have fallen behind. Now is a wonderful time to start.
If you have been searching, “how much should I have saved in my 20s,” you are already on the right track!
How to Determine Savings
Three factors can help you organize your savings:
1. Short Term Goals
The answer to the query, “how much should I have saved in my 20s,” doesn’t offer a one size fits all solution. Savings can vary depending on your earnings, goals, and what you hope to achieve.
For some, regular investment is necessary and might leave them with nothing at the end of the money. Others are working to achieve short-term goals. For example, if you are eyeing that treadmill, set aside an amount each month.
2. Long Term Goals
Long-term goals are trickier. They can span over decades and could even include your retirement plans.
If you are planning to set up your own startup or saving for a house and a car, you might need to dedicate a sizable portion of your monthly income to the goal.
3. 50/30/20 Rule
The 50/30/20 rule has become much like a financial bible for most people in their 20s. This is because it draws clear boundaries between what they can spend, what they need to save, and everything in between.
The 50/30/20 rule states you must dedicate 50% of your budget to your expenses, 30% to your needs, and 20% to your wants. This isn’t bad. In fact, it allows you to enjoy that paycheck without worrying about spending everything!
How Much Should I Have Saved in my 20s: The Short Answer
Aiming for a specific dollar amount to save in your 20s might not work. Everyone has different goals and budgets. This means their savings might differ from others. However, the best way to save is to account for everything you will need today and in the future:
- The Emergency Fund: Emergencies are always around the corner. It is essential to save at least 2% of your monthly earnings for an emergency fund. This will keep you from exhausting your savings and help you avoid debt.
- The House and Car: By your 20s, you should ideally begin saving for a down payment on your future home. The more the down payment, the less the mortgage. The same applies to your first car.
- The Retirement Plan: Your 20s are an exciting time to begin saving for retirement. Try to meet the amount your employer contributes and gradually increase it over time.
- Credit: Start paying off your debts so you are well on your way to building good credit for the future. This can get you many financial benefits down the line.
- Investment: You can also set aside a particular amount to reinvest in any way you like.
- The Future: It is a great idea to save for further education or even to spend on certifications that can help advance your career. Now is a great time!
Saving at any stage of life is intelligent. If you are wondering how to manage your finances, it is time to contact an experienced financial advisor like Maggi Tax.
Maggi Tax can help you determine your savings and get you on your way to financial success in the future. Call (727) 799-1701 for an appointment today!