How Much Should You Save Per Month?
The amount of money earned monthly for each individual varies. Financial obligations also vary. For these reasons, it is essential to recognize that one specific dollar amount will not work for everyone. However, there are some guidelines that can be followed when considering how much you should be saving monthly.
Eliminate Existing Credit Card Debt
You need to concentrate on paying off any existing credit card debt prior to beginning your savings program. There is no sense saving money, if you are paying that amount or even more on credit card interest. Once you have completed paying off your debt, it is time to begin your savings program.
Ten Percent is a Good Starting Point
The majority of experts agree that the standard amount that should be put away every month is no less than 10% of your monthly salary. This is an easy starting point because it is a specific percentage of your monthly income. It should not be very difficult to save this portion of your monthly income. Eventually, you should try to increase the percentage saved each month.
Keep a Record of Your Expenses
Keeping a record of your monthly expenses is a great way to determine where you can cut back.
Tighten Your Belt
Some areas you may find ways to cut back include:
- Eliminate unnecessary vehicles or carpool to save money on fuel.
- Refinance your mortgage at a lower interest rate or move to an apartment that is less expensive.
- Purchase clothing on clearance or on the sales racks.
- Investigate the different car insurance carriers to see if you can get a better deal. A higher deductible is also an option to consider.
- Can you eliminate satellite television or cable TV?
- Consider eliminating your land line and only use your mobile phone. Use services such as Skype or call over the internet.
- Lower your monthly utility bills.
Another typical way of measuring whether you are saving a substantial amount of money is to determine if you feel like your finances are just a little tight. If this is your situation, then you are saving plenty.
Increase Percentage Saved
Once you have adjusted to putting the 10% away on a monthly basis and things are running smoothly, consider increasing the percentage you save. If you earn more money than you need on a monthly basis, save as much of it as you can.
After you start your savings program, give your saved money a purpose. For instance, you need to have enough money saved to pay for your living expenses for three to six months. This is your emergency fund.
Once you have your emergency fund in place, consider saving for your retirement. Experts agree that you should put 15% of your monthly income away just for your retirement.
Saving for Yourself
There are also some non-essential, fun reasons to save your money. You can save your money to go on vacation or purchase a new home or car. Once you start looking at the various ways you can save your money, you will be amazed at the amount of power your money has. It will begin growing very fast if you continue to be meticulous about saving every month.