Author: Ashley Eneriz / Source: Wise Bread
It seems that current financial news is laser-focused on the crisis of skyrocketing student loan and credit card debt. While it’s easy to focus on what the average American owes, we often forget that there is a savings crisis going on at the same time.
According to a 2017 GOBankingRates survey, more than half of Americans (57 percent) have less than $1,000 in their savings accounts.
An astounding 39 percent of Americans have no savings whatsoever.Retirement savings aren’t faring well, either. According to a 2016 retirement confidence survey, more than a third of workers over age 50, and half the surveyed retirees, had less than $25,000 put away for retirement. Imagine trying to live the decades of your golden years on such a small nest egg.
It is time to save more money. Start following these savings goals for every decade of your life, and you won’t end up as a sad savings statistic.
In your 20s
Don’t waste your 20s thinking you have plenty of time to earn more and save more. Putting away even a small percentage of your income each month can translate into big savings by the time you hit your 50s.
Savings goals
In your 20s, your first goal should be to start an emergency fund and build it to $1,000. Setting up this emergency fund gives your finances a little cushion so that you can avoid dipping into debt every time something goes awry. Once you hit the $1,000 mark, build up your emergency fund to three to six months’ worth of daily living expenses. This will protect your finances even further against expensive emergencies or a job loss.
Retirement goals
Before you leave your 20s, use your gross annual income as the target amount for how much you should have saved for retirement.
For example, individuals making $40,000 per year should try to have $40,000 saved in their retirement accounts before turning 30. This goal sounds daunting, but it’s achievable, especially if you start earlier rather than later. (See also: 5 Retirement Accounts You Don’t Need a Ton of Money to Open)If your company offers automatic deductions from your paycheck into a 401(k) each month, make sure you’re enrolled so you won’t have to consciously make the sacrifice. If you work for a company that offers a 401(k) match on a percentage of your contributions, make sure you’re contributing enough to get that match. Otherwise, you’re leaving free money on the table.
In your 30s
With the growing pains of your 20s out of the way, it’s time to step up your personal finance game. During this decade of your life, you’ll ideally start earning more money and keep the ball rolling on your savings goals. Remember to steer clear of unnecessary debt: In your 30s, you may be balancing a student loan with a new mortgage payment, so the less additional debt you take on, the easier it will be to reach your money goals.
Savings goals
If you have more expenses or are earning more money than you were in your 20s — especially if it’s a lot more — you need to grow your emergency fund to a larger cushion. Aim to cover a year’s worth of your daily living expenses (payments on your mortgage, student loan, credit cards, utilities, etc.). Once your emergency fund is fully funded, you want to keep that money there. Only dip into it when an emergency happens. After your financial emergency has been dealt with, you should get back to fully funding the account. (See also: 8 Ways to Decide if It’s a “Fund-Worthy” Emergency)
Retirement goals
In your 30s, focus on doubling the amount in your retirement accounts to twice that of your annual gross income. Make sure your retirement portfolio is not set to an ultra conservative investment mix. You have several decades before retirement, plenty of time…
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