How Much You Should Have in Savings
The amount you should have in savings is not static; it depends on your situation. For instance, if you have multiple sources of income, you will need to have more savings than someone with just one source of income. There is no specific answer to this question.
The amount you should have saved also depends on your budget and your goal for saving. You know your budget and financial situation more than anyone, so you will be able to determine how much you need to keep.
You need a reason to figure out how much you need to save. However, the general recommendation is three to six months’ expenses.
Also, know that your lifestyle still determines this. No one is too old or too young to have savings, and no matter what stage of life you are in, it is necessary to have a savings account.
Read More: Best Banks for Savings Accounts in Nigeria
How Much Should You Have Saved
This answer depends on your reason for saving. It implies that your reason for saving will determine “how much you should Have in Savings.”
- Savings towards retirement will require 10 – 15% of your income. You must save up a good amount of money to avoid going broke after your retirement. And know that no matter what stage you are in now, it is never too late to start saving. You can also join a reliable retirement program to aid your savings.
- If you are saving for an emergency, you must establish an emergency fund covering up to 3-9 months of your living expenses. You can adjust the amount to fit your family needs, job stability, bill obligation, and other factors. The truth is emergencies are not predictable, so emergencies like an accident, illness, or job loss can drastically affect your finances if you are not fully prepared.
- You must add your monthly contribution to your emergency and retirement fund for personal savings, then subtract these funds from your income. Then, from the remainder, you should set aside a good amount of money to satisfy your daily needs.
Tips to Engage in Saving
Asking how much you should have in savings is great, but some tips help you get the best out of your savings; they are listed below.
- Consult a financial expert.
- Create a budget.
- Schedule your savings.
- Consolidate debt.
- Save through different mediums.
- Create separate accounts.
1. Consult a Financial Expert
When determining how much to save, consult a financial expert. The expert will help you develop a good savings plan based on your current financial situation, enabling you to grow your account balance and retirement savings.
2. Create a Budget
You also need to create a savings budget. Creating a budget will enable you to know where your money is and what you spend your money on monthly. It will, in turn, help you to cut down on spending and increase your savings.
3. Schedule your Savings
It means allocating an exact amount of money from your monthly allowance to your savings account. It will ensure that you meet up with your savings every month.
4. Consolidate Debt
When you consolidate debt to a lower rate, it will help you save money, allow you to reduce your overall payment every month, and help you contribute to your savings account.
5. Save Through Different Mediums
Saving through different mediums like certificates of deposits and money market accounts will give you steady returns that you can channel to savings and protect you from market fluctuations.
6. Create Separate Accounts
Creating separate accounts will enable you to keep your savings untouched.
How Much Should You Save in a Month
Determining how much to save monthly is challenging. How much you should save monthly is dynamic. It is dependent on some factors like;
- Your saving goals.
- Reason for saving (long-term or short-term goals).
- Your monthly income.
- Your lifestyle.
The 50/30/20 rule is a great way to split your monthly income. It states that you should give 50% of your income to essentials like gas, groceries, and housing, 30% to your wants, and 20% to your savings.
But saving 10 to 20 per cent of your monthly income is generally better. And sometimes, the 20% rule is only sometimes suitable for everyone, so if you cannot save up to 10 or 20 per cent, you can save whatever you have. It would help if you looked at the factors above to determine what you can save.
How to Make Saving Easy
To make saving easy, you need to:
- Pay off auto loans, credit card debts, and other debts.
- Save up to three months’ worth of your living expenses. You will need it in case of emergencies or loss of job.
- Invest your money wisely. You can do this by investing in stocks, bonds, and real estate.
Paying off debts and loans, saving up to three months’ expenses, and investing your money will make saving easy.
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