If you’re wondering how much you should have in savings by the time you’re 25, you’re already on the right track. At an age where financial independence becomes increasingly more important, how much you can save depends on a number of factors, including income and debt.
Savings at Age 25
Many experts agree that most young adults in their 20s should allocate 10% of their income to savings. One of the worst pitfalls for young adults is to push off saving money until they’re older.
If you begin at 10% and find that you still have money left over by the time you receive your next paycheck, you may be able to comfortably increase the amount you’re saving per month. You should also consider saving for retirement. CNN Money offers retirement savings suggestions based on your income level:
| Income | Amount Saved Per Year |
| $40,000 | $4,000 |
| $65,000 | $6,500 |
| $90,000 | $9,000 |
| $115,000 | $11,500 |
Financial Goals to Make Saving Easier
As nice as saving 10% may sound, there are other factors that can impact to how much you may actually be able to save, including necessary expenses and debt. Here are some milestones that can help you save money each month and help your credit and future purchases:
- Pay off auto loans, credit card debts and other consumer debts as soon as possible. This does not include student loans and mortgages. You’ll want to focus on the higher interest debt first.
- Save three months’ worth of living expenses in case of job loss or emergencies. This will allow you to create an emergency fund in case you encounter unexpected financial hardships.
- Start investing your money in stocks, real estate or bonds. One of the easiest ways to do this is to take advantage of a 401(k) or other retirement fund offered by your employer. Often, employers will match your contribution, so this is a good way to maximize your investment and make it grow quickly.
Visit a First Bank Location Today
Regardless of your age, it’s important to make savings a priority. If you’re in your 20s and getting started, it can help to have some professional advice. To learn more, turn to the financial advisors at your local First Bank.* We help with money management at any age and will help you open right savings account so that you can achieve your future goals.
Read these helpful articles by First Bank: Online Money Hacks, Budgeting 101: Personal Budget Categories, and 5 Money Saving Tips for Young Adults
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Sources:
CNN Money: http://money.cnn.com/gallery/retirement/2015/09/01/how-much-do-i-need-for-retirement/
Money Under 30: https://www.moneyunder30.com/how-much-money-saved-30
How Stuff Works: http://money.howstuffworks.com/personal-finance/budgeting/how-much-should-i-save-from-paycheck1.htm
