How Much Should I Be Saving Each Month?
When beginning to think about savings you need to make the decision of how much are you going to set aside each month to different savings accounts. Most financial professionals go by the 10/15 rule. They tell you to place 10% of your monthly income in a savings account and they say place 15% in a retirement account. I will go more into retirement accounts at a later date.
For the most part I agree with the 10% rule for savings. Lets say for example your family makes $60,000 a year. You should be placing a total of $6,000 each year into an interest bearing savings account. If you are living within your means this should be very reasonable. The biggest rule that I tell anyone when it comes to putting money away in savings is there is no better time than the present to begin. The sooner in life you begin to save the fast you can be comfortable with your finances.
So some of you are probably asking how much do I place away each month. Well currently my wife and I do not have kids, we don’t hold credit card debt and we do not have any car payments. We generally have a 40% savings rate every month. Some months this might be a little different depending on any unexpected expenses, but I like to place at least 30-40% in a income account.
What is your families rule when it comes to how much you save? Do you have a number you try and follow each month?