What is a good amount of Money to Have in My savings, and how much should I Keep in My Savings? One of the qualities of a good financial manager is to develop the habit of savings. This is because; saving helps to deal with unexpected expenses and emergencies.
It is paramount for every entrepreneur, business owner, salary earner, and more to learn how to save up funds for unforeseen situations. But after careful research, we found out that many don’t exactly know how much they should have in their savings.
The question – How Much Should I Have in My Savings? Has been a frequently asked question. On the contrary, there is no specific answer to the question of how much should I have in my savings. The amount of money you should have in your Savings account totally depends on several factors. These factors include; your Lifestyle, your personal financial goal, Age, Upcoming events, and more.
But it is advisable, to save up enough money to sustain you and your family for up to three or four months. If you don’t have enough funds to last you for three to four months; then you should ask yourself how should i start saving. You can read through this article to learn how to get started.
How Much Should You Have In Savings Account?
We have already established the fact that you should have more than enough to last you and those that depend on you for financial assistance or help. But as mentioned, there are several factors that determine how much you need to have in your savings.
Some of the factors earlier stated include; Your Age, Lifestyle, upcoming events, and a lot more. Firstly, your age can determine how much you need to save; for instance, how much as 25 years old individual will save differs from how much a 55-year-old person will save.
In other words, you need to consider your age before planning your financial goal. Aside from age, another factor that can determine how much you should have in your savings account is your lifestyle. If you love traveling, you need to have enough funds to cover your traveling expenses.
Or maybe you have upcoming events such as planning for a wedding, or maybe you have a newborn baby. You will need to carefully plan and save up. It is also important for you to save up for unforeseen emergencies.
How Much Money Do I need to Retire?- Retirement Savings
Saving for Retirement is a wise decision every salary earner needs to put into consideration. The earlier you start saving for retirement, the longer you will be able to take advantage of the power of compounding interest.
Based on research, the best rule to make use of while saving for retirement is you should save up to three times your age 30 income at age 40. And six times your age 40 income at age 55 and beyond.
To illustrate this, if at the age of 30 you earn $55,000 per year; your retirement saving should be $55,000. So, if you are wondering how much should I have in my 401K retirement account; you should have three times your 30 years old retirement savings.
It is worthy to note that; a 401K Plan is a retirement savings plan mainly offered by American employers that has tax benefits for the saver. Below is a table illustrating the 401K Average age Retirement Plan in the USA. Note that; this analysis was made by Fidelity Investment.
401K Average Age Retirement Plan
|AGE||AVERAGE RETRIMENT BALANCE|
|20 to 29||$10,500|
|30 to 39||$38,400|
|40 to 49||$93,400|
|50 to 59||$160,000|
|60 to 69||$182,100|
|70 to 79||$171,400|
How Much Should I Save for Emergency?
An emergency is also known as an unforeseen incident and it might occur at any point in your life. In order not to be taken by surprise, you need to start saving up funds for these incidents. This emergency might include; a car breakdown, replacement of your house, accidents, death of a relative, and more. You can store up your emergency funds in your account or you can invest your money in a lucrative business.
But the best thing to do is to keep your funds in a money market account. To calculate how much you need to save up for an emergency, first, remove all your important savings. Note; your emergency saving should be your extra income or funds.
How to Start your Saving Goal for 2022
After understanding how much you need to have in your saving account, you need to learn how to start saving effectively. And so in this section of the article, we will be showing you some simple and easy steps to start saving;
- Track and Monitor your Expenses
- Find ways to reduce your spending
- Create a Realistic Budget
- Set up a Saving Goal – Short-term goals or Long term Goal
- Open a Savings Account
- Monitor and watch your progress
You can start saving today, by following the above steps and guidelines on how to start saving. Make sure to watch your spending and monitor your progress daily, weekly, monthly, and even yearly.