To stay out of financial hardship, it is smart to pay close attention to how much income is being generated and spent. When looking into how much money one should save every month, the 50/20/30 rule is a good way to go.
- 50% of income should be reserved for the essentials, like food and rent.
- 30% should be set aside for lifestyle choices, like exercise classes, dinner out, etc.
- 20% of the income is set aside for priority payments, like debt, savings and retirement funds.
These percentages are for one's gross, after-tax income.
An emergency fund is also beneficial to have. With more than 5 million Americans unemployed for months at a time, an emergency fund can save people from going into major credit card debt. But how big should it be? Many experts in the industry recommend saving 9 months to a year in set-aside income; However, this can be a lot for people. It may be easier to start small, and save at least $100 a month, or 10% each paycheck.
Even just a mere $1000 saved up can be extremely helpful when an unexpected expense arises. Anything set aside helps. Each family should determine a set emergency amount to work up to, and start getting into the habit of saving.
What Are The Easiest Ways To Save Money?
1. Save Change
Even though it is a simple trick, saving change and coins can add up. Extra change is frequently overlooked, but coins can add a financial bonus if they are accumulated over time. Banks will even trade coins for bills.
Setting a budget can make all of the difference. Budgets can be used for grocery shopping, fun night outs and more. Once a specific amount has been set, stick to it. New technology and flashy gadgets can be tempting, but remember in the long run, it is better to save than spend. Don't blow the budget.
3. Download A Money Tracking App
Smartphone users can download a variety of apps that help track income and spending. Apps like Mint allow users to see exactly how much money they are generating and what they are spending their income on. Users can even set budgets through the Mint app; they are sent alerts when one of their set budgets is exceeded. It is helpful to see where one's money is really going. Those who don't have smartphones can keep track of their finances with a spiral notebook or excel doc. Writing everything down, and seeing everything upfront can encourage people to save rather than spend.
4. Cut Extra Spending
That extra Starbucks Latte, the latest television, and that beautiful new purse are not necessities. Cutting out even the smallest thing, like a daily scone, can add up quicker than you might think.
To prevent the temptation of shopping, unsubscribe from retailer emails. Evaluate if cable and Netflix are both needed, or if one can be cut out. Cutting extra spending requires time and thought, but can truly save people hundreds of dollars.
5. Shop Smart
When shopping, especially for groceries, it is a smart idea to plan ahead. Make a list, and stick to it. Shop the sales and generic brands that are less expensive. Cutting coupons can also save more money than one may think. Smart shopping is what keeps people on budget.
How Much Money Are People in Debt Saving?
Not surprisingly, most of our visitors come to our site with some kind of debt (anywhere from under $10k to $100k).We surveyed over 200 people on BestDebtCompanys.com and asked them how much they are saving every month. Even though it's recommended that you save 20 percent of your paycheck each month, only 3 percent of the people we surveyed are doing that. Instead, 71 percent of people aren't saving any money. Those with debt are not able to put money aside for emergencies because they are stuck making minimum payments on credit cards that barely cover the interest.
If you want to save money, but are drowning in debt, the best thing you can do is work with a credit counselor. Credit counselors help you determine if settlement or consolidation is best for your current situation. They'll help create a budget where you can pay off your credit cards and set aside a little bit of savings each month.