How Much Should I Save Each Month?
One of the most important pillars of frugal living is to put aside money for savings each month. But answering the age-old question, How much do I save every month? may feel confusing, particularly if you’re not certain where to begin. The amount of money that you should save every month will vary depending on your financial goals.
Financial experts recommend setting aside money each and every month for a “rainy day” or emergency purposes. The purpose behind this recommendation is to protect your finances in case something major happens. If you are a good budget, it shouldn’t be a problem to come up with an amount for rainy day use. When it comes to deciding how much should I save every month, the best rule of thumb is to have a clear and defined goal.
For example, let’s say you want to set aside money each and every month for emergency savings so that you can retire at 60. This goal is easy to define. You simply want to accumulate enough money to live the lifestyle of an elderly retired person. For this particular example, let’s assume that your goal is to live on a pension. How much should I save per month until my pension begins?
We know that the best way to make money is to earn it. So, one of the ways to earn additional income is through investing. We already mentioned how to set aside money each and every month for emergency savings in case life throws us a curve ball. The next thing we need to do is to invest in something that we are knowledgeable about. In our example, let’s assume that we want to make money from writing an informative monthly column for the editorial team at the paper. Therefore, let’s assume that we will need to invest in a writers’ equipment.
Once the investment has been made, the question now becomes, how much should I save for the emergency savings each and every month? Of course, it would be impossible to invest in anything and not need it sooner or later. Therefore, we must all arrive at a specific amount that will be sufficient for emergencies. Once we have arrived at this number, we will be able to determine how much extra money we will need to survive each month until retirement. However, our goal is not to survive during emergencies, but to have a comfortable lifestyle during our retirement years.
Now, if we want to have a comfortable and happy retirement, we must know the true value of our money and use it for emergency savings and investments. This is where most people falter and find themselves in deep financial trouble. They start saving money and spend it on things that they “could” live without, but in reality, they simply didn’t have any extra money to live on when retirement came along. How much should I save each month for the emergency savings?”
By doing the proper research on saving and budgeting correctly, you will have no problem answering the original question of, “How much should I save for the retirement savings goals?” Your financial education and understanding of retirement savings goals will help you achieve these goals and keep them in your long-term planning. Once you have figured out your retirement savings goals, you can then begin setting up your emergency savings goals and actually achieve them.
To figure out your emergency savings goals, you must make a list of your income and expenses each month. You will also need to look at your life expectancy, your comfort level with Social Security benefits, and your cost of living. These are some of the most important factors to set your retirement fund apart from your other expenses. Using a calculator or investing an hour a day using online tools, you can find out how much you will be able to afford to save for your retirement.
