How Much Should I Save?

If you have a 401(k) plan through your employer, you can contribute a percentage of your paycheck to your 401(k) for your retirement years. However, there are many different factors that go into how much you should save, and in what form of savings, based on your personal finance goals.

Ask yourself, What are my goals?

1. Prioritize Goals with a timeline:

a. Less than one year

i. Vacation

ii. Emergency Savings

iii. Holidays

iv. Taxes

b. Less than 10 years

i. New car

ii. Buy a house

iii. Home Repairs/Renovation

iv. College Savings

c. Lifetime

i. Retirement

2. Control Spending: How much should I be paying?

a. Mortgage = > 29%

b. Car Payment = > 15%

c. Total Debt = > 36%

3. Begin Saving: New to saving? Try the 50/20/30 method for spending vs saving

a. 50% Essential Spending

i. Housing, food, utilities, transportation, childcare, insurance,

minimum debt payments

b. 20% Savings

i. Retirement Savings, savings plans, additional debt payments,

emergency savings

c. 30% Flexible Spending

i. Entertainment, gym memberships, trips, etc.