Financial experts commonly recommend saving 15-20% of your gross income each month, which includes contributions to retirement, emergency funds, and other goals.
Popular Budgeting Rules
The 50/30/20 rule allocates 50% of take-home pay to needs, 30% to wants, and 20% to savings and debt repayment beyond minimums.
Fidelity's 50/15/5 guideline suggests 50% for essentials, 15% for retirement, and 5% for short-term savings, totaling 20%.
These rules provide flexible starting points adjusted for personal factors like debt, income stability, and age.
Key Considerations
Prioritize an emergency fund covering 3-6 months of expenses before other savings.
Higher earners may aim above 20% for tax benefits and wealth building, while those with tight budgets start smaller, like 10%, and increase over time.
Automate transfers to high-yield accounts to make saving consistent regardless of exact percentage.