Saving is important part of life. It is not just vital for your personal finances but for your life in general. By having enough saved money you can be sure to be able to handle any emergency that might come around. The reality is that emergencies will come no matter what. You have to face that fact. So, how much should you save?

We have to be honest about things. Oftentimes, saving is the last thing that comes to our mind when we get our hands on some money. The first thing that most people would consider, is what they can buy with that money. If it took you a great deal of effort to earn the money, that’s understandable why you want to get the most out of it.

How Much Are You Supposed to Save?

The quickest reply to this question would be as much of it as you can. But most people won’t find that answer helpful . They would always find some excuses to increase their spending and forget about saving. The good news is that experts have shared their thoughts on how much exactly you must set aside as savings.

There is the so-called 50/20/30 rule. According to this rule you have to divide your budget into three parts. The biggest part, which is 50% of your budget, should be set aside for essentials, or the things that you need most. These would include food and bills payments. The second biggest part, which is 30% of the budget, should be meant for your “lifestyle choices.” These could include money to be spent on going out on dates, clubbing and eating out. Under this rule, the remaining 20% should be set aside for your financial options, like paying off debts, contributions to your retirement benefits and your savings, of course.

According to that rule someone who makes $ 35,000 each year would have to set aside about $4,900 of their income after taxes each year in order to pay for financial obligations and set aside. For someone with a relatively small income that is a big amount, too large to be considered seriously as an option for savings. Is that rule a valid one or is it just something that some so-called experts came up with without actually thinking about how things are in reality?

Following the Rule

According to experts, the problem isn’t saving 20% for financial priorities. Most people can actually do that, even those who are on smaller income. The problem actually lies in how that amount, which is supposed to be for financial priorities, is used.

Many consumers simply have too much debt and other obligations to be paid, that little if anything is left of the 20% to be set aside. In some cases, the amount that is intended for financial priorities is actually insufficient for debt payments. That is where the difficulty in following the 50/20/30 rule would lie.

Saving 10% of Your income

There is another rule that has been proposed on how much you should save from your monthly income. This time, instead of including your monthly savings together with other financial priorities, they have named a specific percentage of what you should set aside from your income. The percentage that they have come up with is 10% of your total income.

They say that it should be easy to set aside 10% of your income as savings. For most people that can be a fixed monthly amount. They don’t have to do any math at all. The trick is that you shouldn’t stop with that. As soon as you know that you can save more than 10%, you should start increasing the amount of your savings.

Your savings should also have a purpose. There should be a long-term and a short-term purpose for your savings. The long-term purpose of course is for your retirement. The short-term purpose is to have enough money saved for emergency living expenses. Ideally, you should have at least three months’ worth of your living expenses saved as an emergency fund. You can use that fund just in case you lose your job or you become sick. That should ensure that you would have money to spend while you are recovering or looking for a job without disrupting your lifestyle.

Increasing the Amount That You Save

If you can afford it, you shouldn’t just stick with the 10% rule when it comes to saving money. You should try to increase the amount that you set aside each month. That’s easier said than done. Saving isn’t an easy thing to do, but here are some proven strategies on how you can do that.

Matching Contributions

Do you have a 401K? If you do, you can increase your savings in it with free money. Yes, you read that right, free money. Where would that come from? It would come from the matching contributions of your employer. That would be money that will be contributed by your employer towards your 401K. Employers would match up to a certain percentage of your total contributions.

Setting Up an Automatic Transfer

Sometimes you might want to save more money, but the problem is that before you can deposit into your savings account, you get to spend it already. What you can do is to set up an automatic transfer. This means that a certain amount will be taken out of the account where you received your pay and be transferred into your savings account. You can set this up personally with your bank or you can do it online.

Cut Down Your Spending

Sometimes the best ways are the most direct ones. This is the same thing when it comes to saving money. If you want to increase your savings then consider increasing your income. But the increase in income does not necessarily mean the increase in savings. That would be up to you. In fact, the best way to increase your spending would be to cut down on your spending. When you spend less you would have more money left over which can ultimately go to savings.

Shopping Wisely

Another direct way to increase your monthly savings would be to shop wisely. When you go out to shop you should plan it and try to avoid shopping on impulse. Unplanned shopping increases the likelihood that you will spend more. You should also think about the brands that you buy. Are they the most cost-efficient choices that you have? You should consider using coupons if you have not used that before. Online shopping has also been proven to be an effective and a great money saver.

But you should realize that saving is not going to be enough for you. You should also consider investing money. The reality is that no matter how much money people try to save, it is not going to be enough once they retire. Investment is the only solution to this problem. But investing is a totally different matter from saving and there are more things that you have to consider for that, since it is more complicated.