As a rule, I try to save more than I spend. This doesn’t work out on regular pay months, when I have to pay rent and bills (27% of income), and I spend between $1000-$1400 (34%-48%). But I save a *minimum* of $700 (24%). But a couple times a year, I get big bonuses, due to my salary structure. In March, I took home $13.4k. I spent $1k (excluding rent and bills). I think it probably made me happier than if I’d blown half of it on a designer bag or some crap like that.

This may be due to my personality and my desire to save up as much as possible so I can quit my job and chase my dream — to write, full-time — when I’m about 32. I’m 24, now. But I think for the most part, people would be better off if they spent just enough to keep themselves fed and reasonably comfortable, while leaving the rest for security, peace of mind and your family’s future. Find happiness in more intangible things. I find it in places like my husband (who earns much less than I do, btw), and in my job, which I find meaningful.

I hope I don’t sound too much like I’m on a high horse, here. I guess my own habits and values just demonstrate what Updegrave is quoted as saying in this article.

tis has worked for me for some time, why 50% into checking most of all bills get paid in that account. why 2 savings? savings 1 is for in case of emerergy, saving 2 is never to be touch rearly! it might not seem like a great percentage to be at, but i have a budget all worked out to $2,500 and with bills and the budget on the $2,500 it leaves me with $820 extra with all that, if i make more than $2,500 its extra because my paychecks goes from $850, $775, $750, $650, $550 depends im a OTR driver depends on the milegae i drive durning the week, i get paid weekly every tuesday.. weekly pay is so much beteter than every other week!

“Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less than any inherited wealth, is what your net worth should be.”

Since we are a two income household, I modify the formula to use the average age of my wife and I.

Well, ultimately, I think the minimum should be:
1. If your company offers a 401k or 403b, save as much as you need to in order to get the company’s match. Like for me, it is at least 5% and the company matches with 10% of base salary.

2. Set up an automatic savings account that allows you to put aside at least 6 months of living expenses. I call it the automatic emergency fund. Once that has crossed the 3 – 6 month living expenses limit, set up a Roth IRA and add the rest there.

I think there are many creative ways to be a steward, but it is important to live the life you want to live, in a comfortable manner.
GREAT POST. THANKS>

I’m actually concentrating the majority of that 20% on my car loan which will be paid in full by Oct. 1st, and then it’ll be on to maxing out my Roth IRA and dumping the remainder in my 401K.

Beyond that the percentage is directly related to how many years you wish to work until you retire. 15% pretty much corresponds to 30 years on the job. This is the most normal and why 15% is commonly recommended. Higher numbers, and you can retire earlier. Low numbers and it takes more than 30 years.

I view retirement savings as exactly that; for retirement. A “good enough” percentage there is enough to allow you to retire on (based on your assumption of return, inflation, and lifestyle). For me, maxing out my 401K and my pension should meet my needs. I’m a strong proponent of modeling your retirement incomes versus just assuming x% is good enough.

For me, 5-10% of “other” savings is a good minimum to cover the unexpected. Things like loss of job, home/car repairs, and the like. A thousand dollar emergency fund is a great start, but is definitely something to continue building upon if your finances allow.

I could also see a third category of savings for specific goals: cars, home improvements, vacations, etc. I’ve been able to plan for most of these in my general monthly budget (i.e., put a $XXX planned expense in June for vacation).

Thanks for the input, but then I think there needs to be a “good enough” percentage for retirement savings. I have averaged 17% contributions in my 401K (= 3% match) this year, I’m still saving it, but it makes my savings rate seem lower.

Perhaps the suggested savings rates should be broken out into retirement and non-retirement and this might depend on one’s age, (or maybe not).

Atul

One of the “tricks” I used to get to these levels was to roll my debt snowball(s) right into savings snowballs.

That is a fantastic idea!

In regards to UH2L’s question, I think the minimum 10% savings should be in addition to retirement vehicles.

My savings break out as such (all percentages are of gross):
401K: 10% + 3.5% company match
HSA: 3.5%
Voluntary Pension: 3.0%
General Savings: 13.5% (some of this then goes to IRA’s)
Total: 33.5%

One of the “tricks” I used to get to these levels was to roll my debt snowball(s) right into savings snowballs.

In any case, I think you have to re-evaluate your progress often (or maybe once a year) and readjust to stay on track. I probably have some adjustments to make after the market’s performance this past year.

I love the discussion though, because it is so wonderfully personal. There is no way that anyone could simply declare a number or a percentage and say that everyone must save x%. While there are some rules of thumb (10% I guess) – it depends.

I like to think of it in terms of “healthy” and “unhealthy”. What’s a healthy savings percentage, and what is unhealthy? How can we move from unhealthy to healthy? At what point are we saving too much?

Once I am in a more comfortable spot (debt down & EF built up) I plan to have at least 10% going into cash savings and 10% going into retirement savings.

Once 2nd mortgage & student loans are gone I want to save between 25% and 50% of my income…I’ll let you know when I get there!