You know you should be saving every month, but do you know how much? Some people figure if they put a little money aside they’re doing great.
It may not be enough.
The earlier you save for all your financial goals, the faster you’ll reach your desired outcome. Taking advantage of compounding interest is the only way to make your money grow fast.
So how much should you save? Check out our tips below.
Target This Percentage of your Income Each Month
Eventually, you should save 20% of your income. If you bring home $6,000, that’s $1,200 saved a month.
You’ll work up to this. Make this your ‘ultimate goal.’ For now, figure out how much you can save. Use the 20% rule, setting aside 20% of your income for savings AND debt payoff.
High-interest debt eats the interest you’d earn on any savings. For example, let’s say you have a rate of return of 3% on your conservative investments, but you have credit card debt with a 19% interest rate. You aren’t doing yourself any favours by saving at 3% and letting 19% interest accumulate on your debts. Use the 20% of your income to pay off your debts and work your way up to saving the full amount.
By Steve Slawinski of Global Fintech News.