How Much Money Should I Have Saved by Age 30?

Wondering how much money you need to have set aside for emergencies and your retirement? In this article, we discuss the hows and whys of saving for the future.
How Much Money Should I Have Saved by Age 30

Adulthood is a period in our lives that has always loomed around the corner that you’d think it was easy to expect. Suddenly, you’ve got bills to pay and the ever-increasing worry about having saved enough money for the future. 

It can be overwhelming, but don’t fret: it’s common to find yourself unprepared, more so to find yourself stumbling to accumulate an emergency fund and retirement savings along with your day-to-day expenses. Likewise, it’s never too late or too early to start redirecting money into your savings.

There is no must-have number by a certain threshold of age. But a good way to calculate an appropriate number is to use your age as a guide, considering median averages and common life events. Age 30 is just as good a time as any to estimate with your emergency fund, savings goals, and retirement savings in mind.

 

So how much money should you have saved by 30?

Many factors can affect the amount of money in your savings account, including:

  • A secure and comfortable retirement
  • Money set aside for unexpected calamities or medical emergencies
  • Your budgeting
  • Other possible sources of income

 

Saving for Retirement

Savings are subjective to your income, saving goals, and lifestyle; as such, there is no absolute number. According to Fidelity Investments, the rule of thumb is to have saved as much as your annual income when you reach the age of 30. 

Of course, this itself is not concrete. Factors that can affect your retirement include:

  • Your desired retirement age
  • Your desired lifestyle when you retire

 

Retirement Age

Deciding when you want to retire will have a significant impact on your savings. Delaying your retirement will give you more time to save and will give your Social Security benefits more time to increase.

Of course, this is not absolute as retirement can be affected by your health and work. So it is ideal to start saving as soon as possible, as it can only positively affect your retirement account. Likewise, delaying your retirement can do the same thing. 

 

Retirement Lifestyle

You should consider what kind of lifestyle you will be content to have when you retire, as your expenses will depend largely on how you will go about your day-to-day. This, in turn, should be considered when you save for retirement. In this case, your chosen lifestyle can be one of three types: below average, average, and average.

A below-average lifestyle is when your expenses are lower than how you currently spend. An average lifestyle is when your expenses during your retirement are about the same as how you currently spend. Lastly, an above-average lifestyle is spending more money in retirement than you did when you were working.

 

Other options

If you have difficulty following the rule of thumb or want other options, you can set aside 15% each time you receive your salary to add to your retirement savings account. 

This can be jarring, but you can ease into it by taking out a smaller percentage so you can better get used to it, and then add 1% each time. The numbers may start small, but when it comes to savings, every penny counts, and this can no doubt be of help in saving for retirement.

 

Saving for an Emergency Fund

One of the many ways to ensure your security is having money set aside in case of emergencies. 

The fact is you can’t be prepared for everything that life may throw at you. Medical emergencies, natural disasters, a leak in the roof, and your car breaking down are all things that are out of your hands. The most you can do is to be prepared.

It isn’t comforting to think that an unexpected event could be just right around the corner, so having an emergency savings account that you can pull from in times of trouble can decrease the unease.

 

How much should you save for emergencies?

A healthy estimate is to have set aside numbers amounting to 3-6 months’ worth of expenses.

Bankrate presents that only 39% of Americans have accessible money to use for a $1,000 emergency. Pulling out funds from your income into an emergency savings account as early as you can will help be part of that statistic or help you build an even sturdier safety net. 

 

How much you should have in emergency savings by age

Someone who is 30 years old should have savings that amount to $14,115 to $28,280 set aside for emergencies.

According to a 2018 Consumer Expenditure Survey, the average 25 to 34-year-old American has a monthly expenditure of $4705, including essential and non-essential expenses, mortgage, rent, student loan, and car insurance, life insurance, credit card debt, and more factored in.

Below is a table listing goal amounts per decade based on median averages in expenses:

By age It’s ideal to have
30 $14,115 to $28,230
40 $17,799 to $35,599
50 $18,846 to $37,693
60 $16,554 to $33,108
70 $14,067 to $28,134
80 $10,794 to $21,588


Once again it’s important to note that these amounts can vary, and will depend on both your earnings and expenses. These figures are averages taken from the U.S. Bureau of Labor Statistics and may not be an accurate reflection of your lifestyle. It’s best to find an amount that you are comfortable with and better resonates with your financial situation. 

One way to find out this amount is to clarify your savings goals and to track your expenses for a few months. This can help you gauge how much of your monthly expenses you need, giving you a clearer amount in mind.

Once you do have a number in mind, it’s also important to make your emergency funds accessible. Setting up online savings accounts is one of the best ways to make sure that your funds are safely tucked away while being in arm’s reach.

 

Follow a 50/30/20 budgeting scheme

Strictly following a budgeting scheme can help you save more and conditions you to categorize your money to help you view them as separate. You might experience difficulty at first, but you can eventually get the hang of it and even put your budgeting on autopilot.

Consider setting aside 50% of your earnings for necessities like food, water, rent or mortgage, car insurance and life insurance payments, and others. 30% can go to discretionary spending–anything outside of your needs and savings can go here, even your expenditures with your credit card. Lastly, 20% can go to paying off any debts like that of your credit cards and student loans, including your savings.

While this scheme is common and effective, you can adjust percentages to your liking to fit your finances and your savings goal. Once you’ve settled on a scheme, be sure to follow it to the letter.

 

Things that can help you achieve your savings goals

A hearty salary and consistent deposits to your bank account are not the only things that can help you save. There are many ways toincrease the rate of your savings.

  1. Start with yourself. Learn how to manage your money better by keeping track of your spending habits. In addition, make sure you are content with a consistent lifestyle even with an increase in your income or an influx of cash. It can be hard to stop yourself from boosting your expenses in proportion to your earnings, but keep in mind that if you managed with your previous income, you can continue to do so. Having this discipline will help you spend less and redirect more money into your savings.
  2. Take a good look at your expenses and find things that you feel like you will do without. Less expense means more money to save.
  3. Look into other ways to earn money. Finding a part-time job alongside your main source of income can help you save more, especially if you have a surplus of free time. There are many options to choose from. You can start a business, dipping your hands into crafting and selling, and the like.

Investments themselves are another lucrative source of funds. If you have capital, it’s worth considering investing in the stock market.

 

5 Best Budgeting App to Help You Organize Your Finances

1. GoodBudget

Makes use of the envelope system, which is a method where you divide your monthly earnings into different spending categories. In addition, the app allows access with multiple devices, meaning you and your partner or family can keep track of a shared budget. The free version allows one account with two devices, while the paid version allows unlimited accounts with five devices.

2. Mint

A free app wherein you have tools to connect your financial accounts like your credit cards for tracking and categorizing your expenses and transactions. Mint helps track bills and reminds you of upcoming payments. It is good for monitoring even your credit cards, as it notifies you if you are about to go over-budget in a category, and helps provide a level of security by altering you of suspicious and large transactions.

3. Personal Capital

A free app that can help you budget by letting you track your accounts, mortgage, and loans, and categorize your spending. Personal Capital, unlike others on this list, is primarily an investment tool, so if you ever need it to, you can track 401k and IRAs. It also comes with a way to breakdown financial portfolios and tracks net worth.

4. PocketGuard

A free app that can help track savings, income, and recurring bills by allowing you to connect your financial accounts along with credit cards. It helps estimate a figure for your available spending by subtracting your set amount based on your savings goal and monthly expenses from your income, lets you categorize expenses, and import the figures into your own spreadsheets.

5. EveryDollar

An app using zero-based budgeting, which means that your goal is that when your savings, bills, credit card payments, and expenses are subtracted from your income, you get the value of zero. The free version gives you basic access and budget tracking, while the paid version streamlines things by connecting your accounts and also gives you budgeting advice.

 

Take it one step at a time

Take note: be sure to respect your pace. All the things listed here are only suggestions and there isn’t just a single answer to finding success in saving.
It will always depend on the person.

At the end of the day, how you handle your savings will be up to you, and the best methods are the ones that can help you specifically to reach your own goal.

Figure out your priorities as it can give you a firmer grasp on your finances. Order your expenses from most to least important. It can help you organize your funds and may help you in getting your ducks in a row.

Remember, the most important thing when it comes to savings is to get started. You may start as soon as you can, no matter your age. 

Learning how to budget, developing good money management skills, maintaining spending discipline, and saving, are all things best learned early, but it’s never too late to start as long as you’re ready.

Learn more about successful saving schemes and other financial trends by subscribing to Mint Chip Challenge!

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