How Much Money Should You Be Saving At Your Age?

Published on May 3, 2021 by Lauren

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  • It’s some cryptic math that we feel like we should have all the answers for. How much money should you be saving at your age? Whether you’re in your 20s and embarking on adult life, in your 30s and achieving benchmarks, or in your 40s and hoping to reach your goals “in time,” it can be hard to gauge whether you’re saving enough. In this article, we’ll explore what factors should play into your savings plan and how to catch up if you’ve fallen behind. How Much Money Should You Be Saving At Your Age


    How Much Should You Be Saving at Your Age?: Savings in Your 20s, 30s, & 40s

    Where Do I Even Begin?

    Conventional wisdom pushes saving 20% of your income each month. But if you’re like most Americans, your paycheck may have vaporized as soon as it hits your bank account. Between housing payments, groceries, insurance, medical bills, a car payment, and student loans, there may just be nothing left over to put into savings. This is a running list of expenses without children, so listen up, especially if that’s something you’re hoping to do.

    Saving 20% of each paycheck may be out of reach for you now, but fear not. Plenty of people are in the same position, and there are smart ways of catching up.

    According to Clever Girl Finance, nearly 80% of Americans are living paycheck to paycheck. That tidy 6-months’ worth of living expenses cushion? It’s not happening for most of us. But with that said, it isn’t easy to know what to aim for when you’re starting from scratch. Read on for some realistic targets you can aim for.


    Saving in Your 20s

    Fear not: even if you’re gobbled up by student loans and stuck in a low-paying job, you still have plenty of time to strategize, build your wealth, and level up financially. I get it, though– when one happy hour with the girls knocks your entire month’s budget off-course, it can be hard to get back on the horse and try again. 


    Cash Envelopes

    Here’s an easy and practical place to start. Sit down and write out your expenses for each month. You know, the bills you can’t get out of paying: rent, your car payment, health insurance. Then determine how much you have leftover for those fluctuating costs that lie somewhere between “need” and “want” –this is where so many of us get into trouble.

    Cash Envelopes are a straightforward way of setting a limit on what you can spend in a month. Handing over cold, hard cash is going to hurt more than the mere swipe of a card (or, even worse, the passivity of Apple or Google Pay!). Read my tips on using the cash envelope system here

    The rules here are simple. Determine the maximum of what you can spend in a month, hit up the ATM, and fill each cash envelope. But once that envelope is empty, it’s really empty—no more spending in this category. There’s always the option of pulling from another category to cover expenses, but once your cash runs out, it’s truly out. This helps deter you from swiping your credit card and conveniently forgetting about the balance until your bill hits.

    Use those envelopes! When your cash for girls’ nights runs out, it’s time to invite the gals to your place to share a budget bottle of wine on the couch. Not every bonding experience needs to have a teeth-clenching price tag attached.


    Retirement Accounts

    Yeah, but numbers-wise– how much should you be saving in your 20s? If you’re lucky enough to have landed a job with retirement benefits, be sure, you are maximizing them now. I know it may not feel like you have 5 or 6% to fork over each month, but this money will continue growing throughout your career. The sooner you start investing in your retirement, the better– period. If this is the only savings you have, for now, that is an okay place to start.

    If your employer offers a match, be sure to maximize it! They’re putting free money on the table, folks. If this means foregoing your Postmates addiction for a month or switching to budget shampoo, it’s going to be worth it in the long run. Your employer is giving you free money above and beyond your regular pay– as long as you’re willing to demonstrate your own investment too.

    If you’re saving toward retirement in your 20s, you’re on the road to healthy habits when you have a larger income. 


    Dream Big

    If you have life goals lined up, now is the perfect time to dream big: this is your motivation for staying on track with your finances. Want to visit Morocco someday? Hike the Appalachian Trail for a month? Invest in real estate or save up for a home of your own? Create a vision board, girl, because the more you keep these dreams front-and-center, the more motivated you’ll be to stick to your guns when it comes to finances.


    If You’ve Reached Your 30s

    Chances are, if you are in your 30s, you’re surrounded by a million commitments. You’re well enough into your career to have some responsibilities on your plate. You may have moved in with a partner or even have gotten married. Many 30- and 40-somethings choose to start a family. With so much vying for your mental and financial attention, it’s hard to know what to prioritize first.


    Reassess Your Budget

    Maybe you’ve emerged from the studio-apartment-with-thrifted-furniture phase of your life by this point. You’re making a little more than you did straight out of college, and maybe you’re contributing to either your employer’s retirement account or maybe a Roth IRA. Good for you!

    Now it’s time to reassess your budget. Pull every available tool together to tackle this, and be honest with yourself. My Personal Finance Planner gives you a place to pull it all together. Set goals, track your debts, and plan out those money envelopes with the full picture in mind. I’ll bet your finances are more complicated than they were ten years ago, but that’s not necessarily a bad thing. You’ll just need to be more mindful about where your dollars are flying. 

    The laundry list of financial commitments I provided earlier only grows during this phase of life, when you may encounter dependents, property maintenance, and other significant expenses. 


    Make Sure Your Emergency Fund is In Place

    Sure, it’s ideal if you have six months of living expenses stashed in a high-yield savings account… but we know from the numbers that this just isn’t the case for most Americans. What is feasible and doable in a short period of time, if you set your mind to it, is building an emergency cushion of $1,000. Does that number sound intimidating? I promise I can help you get there– and you can do it in as little as 30 days. 

    My online course will provide you with tips and hacks to hustle your way to $1,000 in savings. This means that a flat tire won’t throw you off your game, and an unexpected plumbing cost won’t ruin you financially. Keep your credit cards in your wallet (or better yet, a lockbox), and tap this $1,000 when an unexpected expense hits. 


    How Much Should You Be Saving In Your 30s? 

    If you’ve stashed your $1,000 emergency fund and are comfortably maxing out your employer retirement benefits, it’s time to start thinking bigger.

    Capital One keeps the math simple, recommending you aim for the equivalent of one year’s salary in savings by age 30. Keep in mind that this doesn’t need to be the balance in your bank account; you can factor your retirement into this consideration, as well as any other assets you may have– stocks, for instance.  


    How Much Should You Be Saving In Your 40s?

    Undoubtedly, your life has changed by this point. The once-hazy concept of retirement is becoming a real issue to think about. Perhaps if you have children, you’re starting to think about their higher education. Maybe you’ve built equity in your home or have paid off your car. 

    But getting on your feet and accomplishing what you have by this time in your life may have left you in a sinkhole of debt. Let’s be real; having kids isn’t cheap. Nor is having a professional wardrobe or paying HOA fees. The costs of “adulting” may have caught you off guard, and though you may have made headway in the asset department, you might be cash-poor just keeping up with minimum payments.


    What if I’m Behind?

    Here’s the thing: don’t panic. Especially if you’ve been following rule number one all along (contributing to your retirement). Even if retirement contributions are something you’ve put off until now, it’s time to go on offense and fight your way to solid financial footing. 

    According to Fidelity, you will have ideally stashed away 3 times your annual salary by age 40. If you haven’t, that’s okay. You could be in the worst financial shape of your life, with all that is thrown at you. Aging parents, the needs of your dependents, and other responsibilities may have set you back. Don’t beat yourself up.


    How Much Money Should You Be Saving At Your Age?

    I’ve blasted you with plenty of numbers by this point, but here’s the thing. Savings is savings. According to consumer reporting company Experian, even if you can only afford to bank $2 out of every $100 you earn, that’s still something

    Don’t get caught up on having six figures by age X, or 8 times your salary by the time you’re 35. The most important thing you can do for yourself and your future is to save what you can. This means getting honest and trimming costs wherever possible.

    • In your 20s, aim to contribute to an employer-based or independent retirement account. Learn to balance your bills, necessities, and wants in a monthly budget. If you’re able to, stash $1,000 in an emergency fund.
    • By age 30, try to have the equivalent of one year’s salary saved away. If you’re able to save more, that’s great! You may even seek to beef up your emergency fund to float a few months’ income if you fall upon hard times.
    • By your 40s, aim to have at least 3 times your annual salary stashed away. Be thinking strategically about your retirement accounts. If you’ve put off saving for retirement completely so far, now is the time to get serious.
    • Above all, celebrate your small wins and do what you can. If you saved $20 this month, that’s $20 more than you had in your savings account before. And now it’s gaining interest! Though your progress may seem slow at first, don’t get discouraged. If you’re feeling really stuck, I invite you to explore my Crush Your Debt course so you can redirect those minimum payments to your savings and your security instead. 



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