Lifestyle
No matter how different our mentalities, nationalities, and ages are, we all have this in common: dreams and goals we want to achieve. And whether you dream of buying a new phone or owning a home, you need to save money unless you were born with a silver spoon in your mouth. In that case, this article isn't for you...we're joking, of course, because saving is for everyone!
It's common for people to be unsure about how much money they should save. Although this varies from person to person, financial experts have provided general guidance about this and, more specifically, how much a person should save at each stage in life. Here's some of it:
How much to save in your 20s?
If you're in your early 20s, you're either still at university or a fresh graduate who's about to kickstart your career. We don't expect you to save much money at this age. But getting into the habit of saving is still necessary because it will significantly impact your financial health in the future. So, why not start saving around 5% of your allowance or monthly salary?
In your mid or late 20s, you should take saving more seriously and allocate 10%-25% of your monthly salary to savings.
If you start allocating 10% of your salary and find that you still have money left by the end of the month, you can increase the amount you save each month. But if you find it challenging to save, put a plan to reduce your monthly expenses, or consider getting a second job to make extra money to add to your savings.
How much to save in your 30s?
By 30, you'll have more financial responsibilities and expenses. These may include loan payments, the costs of getting married, and buying a house. But you'll also have more work experience and a higher salary than in your twenties, which means you should increase your savings.
Financial experts usually advise increasing your savings by one percentage point each year. So, if you were setting aside 10% of your salary toward your savings at 25 years old, you should set aside 20% by the time you're 35 years old.
Since it's in your 30s that you start building your wealth, it's a good idea to consider investing if you want to double your savings. And remember, whether your goal is to save for the future, build your wealth, or have enough money to retire comfortably, Bank al Etihad has you covered! Our investment options were made to help you achieve your financial goals. Learn more here.
How much to save in your 40s?
Your 40s are most likely when you'll reach the peak of your career and financial earnings. But it's also when you'll spend the most money in your life. Unlike your 20s and 30s, your 40s will be more financially stable. This means that you should increase your savings and start preparing for retirement.
Also, set aside at least 6 months' worth of living expenses in an emergency fund to cover unexpected costs, especially if you've bought a home or started a family.
If you feel you're behind on your savings goals, don't worry, you still have plenty of time. Focus now on reducing your debts and increasing your savings. Consider diversifying your investment portfolio and taking calculated risks, as your 40s could be a turning point for your wealth.
How much to save in your 50s and 60s?
You'd be mistaken if you thought you could stop saving by 50 or 60. This is when you'll be approaching retirement and probably won't have to worry about paying off loans and your children's school or university tuition anymore, which means you can actually save up. So, double your savings so you can retire in your 60s comfortably.
Also, consider topping up your emergency fund to 1 year's worth of living expenses so that you have more money to cover any unexpected costs without tapping into your retirement savings.
And remember, no matter how old you are, it's never too late to adopt the habit of saving money. You can start now with a savings account from Bank al Etihad.
