How Much Money Should I Have In Savings For Retirement?
Majority of individuals live paycheck to paycheck and manage their expenditures in appropriate manner. It generally happens with working class people to utilize their next salary on grocery, utility bills, credit card dues, house rent and for other non-essential expenditures. In the middle of this, they do not know how much should actually save from all monthly paycheck.
Having an idea about the expenses for which you are sacrificing your income is a great thing but equally important is to save and that too in a particular portion that you must be aware of. Of course, payday helps you pay wide expenses but some payday can assist you in saving some portion every month in savings account and also treated as debt that you should pay yourself first.
To further clarity the concept of as how much one should save from all monthly paychecks, the following points are described as follows:
Save 10% of Income
Most experts have of their opinion that one should save at least 10% of their total income every month that means from all paychecks. Accordingly, you should make this as a habit to reserve 10% of your total income to savings account and after that pay your bills. The earlier you start this process, the more time your investments have to grow. For example, if a wage earner received C$5000 per month, then he should set aside C$500 or C$1000 from the total at the time of receiving paycheck.
To get things done in your favor look at the following steps that helps you save 10% of income as saving:
Create a Budget: A budget is a plan that you make to figure out how much you earn and spend every month. This will further help you locate where to make exact cost cut to avail saving cash.
Track your Spending: According to Bureau of Labor Statistics, an average person spends about $1,725a year on spending in discretionary expenses. This step helps you find where is your making unnecessary payment like drinking, smoking, eating at restaurants frequently, etc.
Be at Home for Maximum Time: Try to stay at home to spend great deal of cash external entertainment and dining expenditures. According to the report, each person in the US pays more than $5000 for leisure activities.
Open a Short Term Savings Account: To save 10 per cent of the total income, you can open a savings account and automate it. This will help you save more as in terms of balance transfer from current account to savings account every month.
The 50/30/20 rule states that you should divide your total income into three distinct percentages of 50%, 30% and 20% respectively. While 50% is of essential and 30% for lifestyle expenses, the remaining 20% should be allocated to savings that you have to keep reserved from all monthly paychecks.
Money saving for the future is very hard, but the longer you delay, the harder it becomes. So start early as soon as possible to fully enjoy your retirement.
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