Tuesday, July 25th 2017

Question

How much of my income should i be saving?

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Answers (3)

8th May 2010 by Keith

It differs for everyone depending on his risk appetite, but in my opinion aim to save as much as you possibly can.

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29th Nov 2009 by cocacolabuffet

How much income should be saved varies from individual to individual. The general rule of thumb is that one must have an emergency fund that can afford his living expenses for at least 6 months. Practically, one should save at least half of his ¡°discretionary income¡± every month. ¡°Discretionary income¡± is whatever left over after deducting all essential expenses such as rent/home loan mortgage, transportation, food and clothes, education(if any) and utilities. Suppose all these expenses on average take up about 80% of one¡¯s income (20% discretionary income) that means he should save at least 10% of his total income.

As you do the math, it will take up to 8 months to save for one month¡¯s living expenses and 48 months to save for 6 months of living expenses. If one wishes to save for the emergency fund in a shorter period of time, he either has to save more or has to find ways to trim down on living expenses.

If one wishes to have money in addition to an emergency fund to make investment, he has to save more than above.

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8th Nov 2009 by Amelia Timbers

The way people manage their money should match their goals. Everyone should have a "rainy day fund" of 6 months of living expenses. Only you can tell what your monthly living expenses are; they change from person to person. Generally, six months of living expenses can be a fairly large number- thousands of dollars- and should be set aside in an easy to access savings fund. Next, work backwards. What are you ten year goals? Twenty? What do you want to have done in that time: purchased a home, invested in stocks, saved for retirement, bought a business, whatever. Figure out what that number will be. Divide that number by the number of months until that time comes. That result is how much you must be somehow putting away to achieve that goal. Meeting this goal may mean saving current income or making additional income. In summary, coordinate currents savings and income with future personal finance needs.

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6th Nov 2009 In Investing 3 Answers | 1915 Views
Subjects: saving, saving income,

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