Do you want to make sure you have enough money saved by the time you turn 30? Are you unsure what is considered enough money? The answer to the latter question will vary for everyone, but we will answer these questions and more as best as we can.
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Why you need to save
Saving money is not just something that you should do. It’s something that you absolutely need to do, but why?
When you save money, you won’t have to rely on high-interest loans, credit cards, or payday loans to cover unexpected costs when life happens. And life happens to all of us, so it’s important to be prepared.
Unfortunately, more than 50% of Americans are living paycheck to paycheck, which makes saving money very difficult. But where there’s a will, there’s a way.
And not only will saving money reduce your stress levels, but it will also make it possible for you to secure financial peace for your future. Here are a few things you should start saving for by your thirties!
Building and maintaining an emergency savings account is a great way for you to work towards your future and maintain your stress levels. For example, MoneyLion has an incredible Safety Net feature that will help you reach your goals.
Saving for retirement can provide you with peace of mind in your golden years. But why is saving for your retirement so important? Many people still rely on Social Security benefits when they retire, but unfortunately, Social Security benefits are not projected to be around forever.
The Social Security Administration estimates that “benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.” As such, you will most likely still be working after Social Security runs out, making it critical that you start saving for retirement as early as your twenties.
A retirement account will make it possible for you to enjoy a stress-free retirement. Start saving money today by contributing to your own investing account to supplement your needs for retirement. A MoneyLion investment account is the best place to start!
Planning for your children
Establishing savings for children is a way to care for the next generation and set your legacy up for success. If you have kids or you’re planning to have children, you should be aware of the fact that daycare, private schooling, and extracurriculars are expenses that parents will need to pay for on behalf of their children.
You can start saving money for your children by taking advantage of MoneyLion’s Safety Net tool. It is as simple as enabling Round-Ups, which will help the accounts slowly gain traction and get you closer to saving a healthy amount of money for your kids.
If you are considering opening a UTMA or a UGMA account for your child, it can be hard to decide between the two, especially because the purpose behind each differs ever so slightly. But if you need help choosing between a UTMA and a UGMA custodial account, this article can help you make the right decision for you and your kids.
Plus, putting money aside for your children’s future education provides benefits and opportunities for children that will teach them the value of financial freedom when they get older. Starting early is key!
Big life events
By saving for major life events, you’ll be able to enjoy major milestones like weddings or vacations without interest rates attached. Saving for these big life events will allow you to feel less anxiety after the event is over rather than being stressed about how you will afford that event and pay it off over time.
Major purchases, like a new car or your first house, are exciting milestones that people reach every single day. Eventually, you will likely get to experience these events as well. If you set money aside, you’ll be able to make these massive purchases burden-free instead of taking out loans or owing a lender for years to come.
How much should I be saving?
You might want to know the average savings by age, but that differs drastically from one person to the next. In order to save what you need, keep in mind that you should save at least 20% of each paycheck that you earn. It’s okay to break up your savings into different accounts as long as 20% of your income is being saved.
Start a savings plan
Should you start saving by putting money in a box under your bed? Well, no. That’s not recommended. Instead, you should find an institution that can offer you the most consumer-friendly savings account, like MoneyLion’s RoarMoney option.
You should start saving more and spending smarter with MoneyLion by your side. We offer RoarMoney accounts to people like you, and they come with early paydays, no minimum balance requirements, access to 55,000 fee-free ATMs, cashback rewards, and many other unbeatable features.
In fact, the number of features that MoneyLion offers with a mobile banking account is quite impressive. Not only that, but MoneyLion offers the opportunity to have a fully-managed investment account that comes without any management fees.
There aren’t any trading fees involved when it comes to saving and growing your funds either. This full-service account has no minimums, and you can set up the auto-investing tool to ensure that you make consistent deposits over time.
This will make it possible for you to benefit from compound interest and market returns as well! Want to get started? Follow the steps below to create your savings plan with MoneyLion.
Step 1: Create a budget and stick to it
How do you know how much you can save each month if you do not know where your money is going? It’s difficult, if not impossible, to do so because without knowing where each dollar is going, you won’t be able to understand how much you can save each month.
Consider writing down your income and jotting down all of your expenses on an Excel spreadsheet. You can categorize the transactions and take a look at where all of your money goes over the course of one month. This way, you can better understand all of your financial responsibilities and better dictate how you spend your money.
Consider setting a dollar amount that you want to spend each month and then stick to it. There are so many free templates and applications out there if you need assistance, but a simple spreadsheet is equally as helpful. If you’d like additional help, be sure to read our article on how to create a budget.
Step 2: Cutting costs
Once you have a budget in place, you might be wondering how you can cut costs further to save even more each month. This is a very important point to consider.
You can reduce your fixed costs by seeking out cheaper housing opportunities or alternatives to cable. You can start working to reduce your variable costs by lowering your grocery bills and entertainment expenses as well.
Finally, you can minimize your debt by utilizing a debt payoff method that puts more towards your debt each month. That way, you can get out of debt faster, which will allow you to save more money for the future.
Step 3: Put money into an investment account
Once you determine how much you can allocate to a savings account, it’s time to let your money work for you by investing. MoneyLion’s investment account is easy to set up and use. It does not require a minimum investment, and your account will be fully managed on your behalf from day one. It’s perfect for new and seasoned investors alike because it allows you to pick your risk tolerance, adjust your portfolio, and auto-invest with the click of the button.
Step 4: What is a safety net?
You should always work on building a safety net, even when you think you have enough money in there because when it rains, it pours. Plus, it’s best to be overly prepared than be set back by unexpected expenses.
As mentioned earlier, Round-Ups are the best option. For example, let’s say you buy a coffee for $2.23 the other morning. Round-Ups will automatically round that purchase up to $3 and put the difference into your investment account.
By purchasing that coffee, you will have placed $0.77 into your account. Now imagine if you bought the same-priced coffee every single day for a whole year. Without even trying, you would have saved more than $280.
When it rains, it pours
Life happens to all of us. Unfortunately, emergencies occur on a regular basis. Whether it be a medical situation, broken garbage disposal, or a natural disaster that destroyed your fence, all of these are emergencies that cost a lot of money. Do what you can to have the best safety net in place to accommodate these rainy days. Use the MoneyLion Safety Net features to help you get in a stable place financially so these surprises don’t send you into overwhelming debt.
Is a savings account necessary?
Yes, a savings account is necessary. It doesn’t matter what type of savings account you have, but you should definitely have one. Check out the MoneyLion Safety Net feature to learn more about saving money for rainy days with MoneyLion! Q: How much money should I have in my savings?
How many months’ worth of savings should you have?
It has been recommended that everyone has at least three months’ worth of expenses in their savings accounts.
What are three main reasons to save money?
Unexpected car repairs, sudden medical bills, and a life event like a pregnancy are three great reasons to save money so you can be prepared for the costs of these events.