How much of your income should be saved?
What percentage of your annual income should be saved for future? What is your opinion?
It has been said that your income should be split into quarters, two for your living, one for charity, and one for saving.
I wish I had enough to give to charity, MickS! That's an excellent idea. I've always been told 10%, though I will do that, or $75 per pay check, depending on which is highest that pay check. It means $150 goes into savings each month, which is the best system I've come up with so far.
I also find that having multiple bank accounts is helpful. I have my checking and two savings accounts. The Checking is the money I'm allowed to spend, I put all my bill money into one savings account and then the other I put my savings into. It has been very successful so far. I never go over and am never short on bills, unless I don't estimate enough for the power bill, but that's a whole rant on its own
The 50/30/20 Rule is not a bad rule to follow when it comes to spending and saving. The rule only takes into account your net income after taxes. 50% is must have necessities like the mortgage, tuition and minimum payments on loans for transportation, food and utilities. 30% is for wants like vacation, entertainment, movies. And 20% is for credit card debt and savings. The less debt you have the more you can save. The problem is that must haves typically exceed the 50% mark for most people and it takes sometimes a year to 2 years to live like this. Saving should start regardless of if you are 10% or 15% mark because every little bit counts. Just stick with it!
In terms of retirement planning, 10 percent of your gross income is the target that is generally a healthy starting point. Yet the more the better.
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