You may be reading this article hoping for an answer to all your savings questions. But how much money you should save each month is so variable and dependent on so many different factors, that there’s no right answer for everyone. Instead, consider the factors relevant to your savings. These are your age, your income, your goals, and your lifestyle.
Your Age
People tend to earn different amounts at various stages of their life. Now, as with anything, there are of course exceptions. Most children do not earn the kinds of salaries that child movie stars receive, for example. But generally, people earn their highest incomes between the ages of 35-55. This age bracket is the period when people are more established and experienced in their careers, and therefore have a higher earning potential. It is also a healthy time of life when people can physically work more hours. Typically, the younger you are, the more of your salary you should be aiming to save. A 25-year-old will likely have more future financial goals than a person of 95 for example.
Your Income
The more you earn, the more you can save. Yes, it is just that simple. But you shouldn’t expect to be able to save $5,000 each month if that is all you earn. You need to allow yourself enough money to live on, in addition to saving. You should ensure that you can afford basic necessities and keep up with your required bills. Everything leftover from here can be comfortably put away into your savings account. Learn more about how to get a high yield savings account.
Your Goals
This is a big one and one that is often overlooked. What are you saving for? Knowing that will give you a great sense of clarity. Your desired goal should guide you as to how much you need to be putting aside each month. If you are 25 and wish to save for a car, then putting aside only $5 a month will see you waiting a very long time before you achieve your goal. Consider what you want and break down its cost into manageable monthly amounts to save. If you’re simply saving for a rainy day, you should set goals anyway. This can help you stay secure in case of emergencies.
Your Lifestyle
Some people would tell you that you need to make sacrifices to save money and achieve your goals, they may even have an opinion on the best way to save money and earn interest. While this is true to an extent, you do need to consider your lifestyle when developing your monthly savings plan. If you have a hobby that you greatly enjoy, for example, will you need to give it up to save your desired monthly amount? Would that be worth it to you or would you prefer to lower the amount you put away each month, and still enjoy your hobby, knowing that it will just take a bit more time to reach your goal. Do not underestimate the importance of maintaining a happy, comfortable lifestyle. Be prepared to cut out some luxuries, sure. But not all of them.
Summary
The short answer is that there is no magic amount that you should save each month since there are many individual factors to take into account. Hopefully, this article has helped you to consider the most important variables in deciding how much you should aim to save. The key is to balance your goals against your income and lifestyle. Take your savings seriously and aim hard for your goals, but do not sacrifice too much today for what you want tomorrow.
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