Growing up sucks the second you realize you have to make money and pay your bills. And there’s so much chatter about making money, saving money and planning for the future—but what does any of that really mean? How much money should you have saved?
Is there even a right answer?
How Much Money Do You Need to Live?
When it comes to figuring out how much money should you have saved, you need first to take a quick look at how much money you need to live.
Your first saving plan should always be for your emergency fund, which should cover somewhere between six to nine months of bills, depending on who you ask.
If you need $3,000 to cover your monthly bills, you should have somewhere between $18,000 to $27,000 saved at any given time, just in case you end up in a bind for a few months and you need to cover your expenses.
Beyond that, your emergency fund should be able to cover things like emergency car, medical or housing expenses—or basically anything that you might need to pay for in a pinch if something happens.
What Do You Want Money For?
The second question you need to ask yourself when you’re trying to figure out how much money should you have saved is what do you want money for.
This is not need-based money; it’s want based money. And there’s nothing wrong with wanting things that you don’t technically need (and don’t let anyone tell you otherwise) pending you can legitimately afford them.
Your want-based money covers things like wanting to go to the movies or catching drinks with the girls after work. It takes into consideration things like Netflix if you like to spend your Sundays vegging out on the couch and catching up on the latest binge-worthy shows. It also counts towards things like the new iPhone you want, your monthly book obsession, or even your knitting habit.
Want-based savings are really short term savings, but they’re savings nonetheless. You can afford the things you want if you’re purposeful with your money and if you save properly!
What Are Your Goals?
Finally, you need to think about the long-term. If you dream of taking a grand European adventure two summers from now, you’re going to need to do some savings planning (followed by actual saving) to make sure you can make that happen.
Likewise, if you’re planning on purchasing your own home, getting a new car or spending a few months in Bali working poolside, then you’re going to have to think in terms of your saving and spending goals.
If you’re trying to figure out how much money should you have saved, it’s important you take into consideration any larger purchase you aspire to make in your future.
So How Much Money Should You Have Saved?
When it comes to how much money you should have saved, the exact dollar amount is going to vary from person-to-person.
But when it comes down to it, you’ll want to make sure you can cover all of the things you need, plus the things you want and any long-term goals that are going to take a serious financial commitment.
There is no right or wrong answer, but it’s important to figure out your magic number and go for it!
How much money do you think you should have saved? Share your thoughts in the comments below?
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