Saving is one of the most challenging things to do, especially these days when the salary is only enough for our monthly rent, grocery shopping, and other essential items. Still, if you know how to manage your salary/ saving, you will save a nice amount of money for your future.
As you live through your life, your goals will continuously change, and once you accomplished one, you already set up the next one, which is good! But, if you’re not saving up any money, it will become harder to achieve. No matter what stage of your life you’re in, a few things will always remain the same. Now, what’s that? Money-saving! You’re never too old or too young to start saving up some money for your future self.
The concept of saving money has become top of mind for most people over the last few months in the U.S. Saving money has a massive impact on our lives; we may not feel it right away, but once you retire, the feeling will hit.
Let us help you out in understanding how saving money works.
How much has each age saved (for retirement) in 2020
According to 2020’s Survey of Consumer Finances, people in the U.S. has saved about the next amounts down below for their retirements:
Average household retirement savings $30,150
Median household retirement savings $13,000
Average household retirement savings $130,900
Median household retirement savings $65,000
Average household retirement savings $250,720
Median household retirement savings $100,000
Average household retirement savings $400,430
Median household retirement savings 134,000
Average household retirement savings $430,000
Median household retirement savings $164,020
Explanation, what does all this mean?
We know numbers are only numbers and you must feel confused after seeing all these amounts. Do not worry; you should use these numbers as a guide for your future savings and goals. You may not save the same amount, but they can give you a starting point. There are also plenty of tools on the internet called “retirement calculator,” which can help you understand more your specific number of savings for the future.
Most people in the U.S. aren’t saving enough for retirement and are starting their retirement years with a meager savings budget.
Should I start saving in my 20s?
Our answer is yes! We know it’s not easy. Saving up for your retirement while your only at the beginning of your 20s can be nearly impossible in your mind. Especially if you’re paying off student loans. Many people in the U.S. who are only in their 20s begin their careers with entry-level paychecks.
Where to start? A good way to start saving up for your retirement while you’re in your 20s is contributing to a retirement account (company-provided). Your employer may even give you a matching contribution up to a certain percentage, consider doing these steps but do not stress or feel overwhelmed! You have your whole life in front of you (nearly 40-50 years) to build up your retirement savings.
What about my 30s – 40s?
Now that we’ve discussed our 20s, let’s talk about our 30s and 40s. These years are a more “serious” period of our life. In your 30s-40s you’re thinking of buying a house, car and having a family.
In America most people buy their first house in their 30s, hovewer many young adults buy their first house even earlier. These drastic changes in your life are not only expensive and hard but can also distract your mind from continuing the “savings” road that you’ve been on for many years.
Let’s look at the birght side, most people in the U.S. in their 30s, have a secured life with a secured job, higher payhecks, which makes it more easy for them to put aside some savings. In these years long-term goals are more important than small ones. In your 20s you can focus on small goals, but once you’re in your 30s you need to think more about your long-term goals and thighten down on your monthly budget.
In my 50s – 70s?
Once you’re in your 50s-70s, you plan to retire, settle down and think about how you would like to spend your days after you stop working. Investing in these ages is a very excellent idea to have. You’re no longer focusing on growing in your job and getting a promotion. By this, you also need to start thinking about changing your credit strategy, how much you should save, and how much you should have already saved.
If you’re still in debt, it’s time to get clear about that too. By the age of 50-70, you don’t want to have debts. If you would see the exact numbers for a guide, how much money you should have saved by this age, please scroll up and look at the average numbers in the U.S. in 2020.
Let us give you some tips for a financially stable retirement:
- Calculate how long your savings should last
- Calculate your annual expenses and incomes
- Plan withdrawals
- Secure yourself
- Emergency savings
- Plan for required minimum distributions
- Keep a belt on your everyday spending
- Consider investing or other sources of income
TOP 7 tips on how to start saving
#1 Record your expenses
You need to be aware of how much you spend every month, keep track of all your costs, even small things such as breakfast, coffee in the morning, everything!
NOTE: There are many spending tracker tools out in the world. Find one and make your saving process more comfortable.
#2 Budget for savings
Great, now you know where and on what are you spending all of your money every month. Now it’s time to organize your expenses into a workable budget. Your budget should be transparent for you. Your costs should measure up to your income. Never spend more of what you earn!
NOTE: Categorize your income with a percentage (save 10%-15% of your income)
#3 Find ways you can cut spending
If you see that you can’t save as much as you would like to, cut off a few things on what you’ve been spending and are not that important. If you have breakfast out in the bar every morning, try to cut it out and to them every second day or only on the weekends.
#4 Set saving goals
This part makes the whole saving process so much easier and gives more sense to it all! If you set some main goals, and why would you like to save money. It will motivate you even more, to continue saving. For example, if you want to buy a house in the future, that will be your everyday motivation for your savings.
NOTE: First, you should set a small – more achievable goal, like a gift or a new dress or phone. This way, you can enjoy the saving process more.
#5 Decide your priorities
After that, you set up all your goals for your savings. The most important thing is how you allocate your savings. Make sure that you don’t only focus on the short-term goals but also the long ones (first), and it’s even more important to plan and save for retirement.
NOTE: Take a few minutes out of your day and learn how to prioritize your savings goals so you can have a transparent and clear idea of where/ how to start saving.
#6 Pick the right tools
In case you’re saving for short-term goals, do consider using an FDIC-insured deposit account. If you’re saving for long-term goals, consider an FDIC-insured individual retirement account, which is tax-efficient saving accounts.
NOTE: You can pick more accounts, not only one, take your time and take a look at every option that you have.
#7 Make saving automatic
Imagine that your account automatically saves the percentage of your savings each month. It would be much more comfortable, right? Contact your bank and ask for an automated transfer (almost every bank has that option).