Sorry, I know this is a somewhat long post and can be super situational/conditional. Here's how to get a personalized target. Sometimes My friends say I am too young for investing and should spend more. Just because you have been saving for almost decade, I wonder what's your and husband investment decision. But it always varies. I bought my house for 58k I came to the table with 10k. You can assume closing costs to be 5% of the home, so at max loan amount, ($210k + $15k)/1.05 = $214k is the home price, so you have a $11k closing cost and $4k will be your down payment. As a rule of thumb, most experts recommend an annual retirement savings goal of 10% to 15% of your pretax income. So there is something to be said about enjoying life a bit too. It’s been a year since my purchase and I would recommend a few tips that has helped me out -. Academic retirement saving studies use the term replacement rate. OP, don't discount the present value of your money and time. Have a clear idea about your career and location - if you plan to change jobs, then use the time to accumulate funds and information about the new location (if applicable). The maximum … In San Francisco it's probably a safe bet to say buying sooner will save you more money overall, even with pmi and that's not even taking into account the money you are paying in rent while you save … Work backwards instead. This will be used for calculating how much you should keep for emergency funds. How Much You Should Save. You have 2 options: 1) buy a less expensive house, or 2) wait and save more money. With this calculation, you're only putting down 1.87% of the home value, which is obviously too low. Many Americans aren't saving enough. Your friends say that you should spend more? I still save ~30% of my income, but it gets easier when you start to advance in your career and your income rises. Make sure you have adequate funds - I am talking about the top three for any home owner - emergency fund (for non home owners as well), down payment (10-20%), and maintenance and repair funds. ... help Reddit App Reddit coins Reddit premium Reddit … Always happy to try to explain anything else about my situation and also really appreciate any advice/tips. What this means is that a $214k house is out of your budget and you need to buy a much less expensive house as you would have too little for down payment and closing costs. Sometimes My friends say I am too young for investing and should spend more. Financially speaking, 100% is optimal. You're not paying for rent/utilities/groceries, so it sounds like you've got 30-40% of your income to spend on your car/car-related expenses (assuming those are not also covered by your family) and...whatever you want. With all the money in the world, can't turn back time and enjoy a little bit of life at age 25 again though. Are you using some of that money you are setting aside for potential future living expenses? Since you have $30k liquid assets, lets say you need 15k in your emergency fund, so you will have $15k for your cash to close. Alright, now let’s talk about what you’re really asking here: How much should I be saving for retirement? Edit: appreciate all the feedback/input/recommendations from everyone. Renting would provide you the ability to move and pursue other opportunities with ease. This all makes sense. I have had the same issue over the years. http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/. We are pretty close to having enough money for retirement now. The younger you are the higher the benefit of every cent saved and invested, simply because it has decades longer to compound. I have a pretty much … Fast Answer: 1. Mostly, I don't know how much I should/need to save to put down, how much I should be keeping in my savings for a rainy day, etc. But saving is good. Considering the greater Seattle area, there are some areas where median house price is $700k (near the city/most work places) and others where it's $300k (further from the city/most work places). Right now you are living with family. How Much Should I Save vs. My friends say I am too young for investing and should spend more. Generally agree with this. Some advise saving as much as 20%, as with the 50/20/30 budget popularized by Senator … 2. How Much You Should Save At 30, 40, 50, and 60 First of all, everybody should be maxing out their 401k. I obviously have a lot more to look into, but I think one of the biggest lessons for me was definitely all of the other costs associated with buying a home. If you start at age 30, though, that number nearly doubles: You need … Most of us save (or should save) for four reasons: Emergencies (job-loss, illness, pandemics) Wants & Goals (new home, kids going to college, new car, trip) Retirement; Security; In the article Americans … If you're starting to save in your early 40s, save 25-35 percent of your pre-tax income—a pretty meaningful chunk of your income. Hopefully, many of you reading this have saved more. The standard that many experts set is to save at … I pay $60/month in pmi on the $450k of my house that is mortgaged. How much should you save every month? Think of it as the foundation upon which your financial house is built. Travel is often cited as something people wish they did more of when younger but finding hobbies or activities you enjoy but have a cost to them is worth considering. How much do you make, and how much is your rent? Nah, screw that. Its not fun to invite your girlfriend over to your parents house. -Paying student loan for Msc. You can be very responsible and save 20+ percent of your income while spending the rest. Is this rate ok or am I too obsessive? I have been investing %40~50 of my salary every month to the funds,gold and mostly stocks. I'm a fairly frugal person and it doesn't take a lot to make me happy. The main reason my husband works now is to set up trust funds for our kids. How much you need to save for retirement depends largely on your current income and the lifestyle you want when you retire. My fiancee is 27, and also has a very good job. Retirement. It’s a multimillion-dollar question, and one poster on Reddit asked it this week . How Much Money Should I Have Saved by 30? One year we only saved 30% but that was only because my husband was starting his own business and I was a stay at home mom. More posts from the personalfinance community. How Much Should You Save? Press J to jump to the feed. However, if you are 50 and your household income is … You should also factor in things like your car (is it reliable? Big help! Considering the greater Seattle area, there are … To reiterate, I don't know approximately how much I should have/keep in an emergency fund, I don't know how much % down I should look to save for a house. You should @ that salary shoot for places around $300k, and then save 20% ideally to avoid PMI and also it’s going to be $60k off of the $300k mark roughly, which means it’s an ok loan $240k, as that’s a little stretch of your salary x3. The contribution maximum should go up $500 … No outcomes related home. In any circumstance would you recommend a 10% down? Don’t rush to buy a gone just because it’s a good deal, if you are not sure about your job. They used to be in the order of hundreds of dollars a month, but these days, a decent credit score means you likely won't even get to $100/month in PMI. 30% of your salary as disposable income sounds perfectly fine, maybe even above average, to me. Down payment depends on your loan. If you save … You should make your decision based on the standard of living you want to maintain and can afford. (%20 of monthly salary). However, many people have no idea about how much space these files take up and how much space should … As my bonus fluctuates year over year, its a little more complicated to factor that in and both have maximum limits (18K for the 401K and 11K for the ROTH IRAs). But what if we’re actually saving too much? Typically, people would allocate 50-70% of their income to cover necessities anyway, so you're just replacing rent, etc with investing. That being said, money is a tool, and prioritization is the game. That said I wouldn't recommend saving 100% of your paycheck to anyone. I know there are general rules of thumb for how much rent you should be paying (One weeks pay, not more than 30% of paycheck, … I did it put down 20% and my PMI is around 85$ per month for a loan of 350k. [I know some of these expenses (especially the rent) are not very efficient, but I'd prefer to grill/look into that another time] Car is reliable/newer, and don't expect any health concerns/life changes. Repairs - this will be a constant thing. However, Blanchett’s analysis found that some retirees can actually live … Your initial savings goal should cover the upfront costs. Bank matched 6k. To be completely transparent, if I change companies I would absolutely be getting a raise, somewhere likely between $85-100k. a savings rate of 50% well invested in diversified index funds means you could retire in as few as 16 years. Part 2 of that "scary" number that you need to save each month for your child's college is that number is based on saving 100% of their … You can be very responsible and save 20+ percent of your income while spending the rest. ), I currently have ~$30k in easily accessible assets (savings, checking, personal stocks - not 401k/HSA). So we can't give you an optimal number. This is the dumbest statement I have ever heard. If absolutely everything somehow fell apart, my parents would be 100% accepting of me moving back home and staying there, etc. A friend just bought a $500k townhome and her parents helped her get to 20% and it quite literally saved her $50/month. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. The maximum 401k contribution for 2018 is $18,500. Let's break this down by goal: 1. Before making that decision, aim to save at least three months’ worth of expenses for emergencies, save 10% to 15% of your income for retirement and pay off your credit card balance each month. Because of this, the money you have to spend will not all go towards your down payment, so you will have to adjust your calculations accordingly for PMI and to know what percentage your down payment really will be. However, I have learned to prioritize the things that I get the most enjoyment out of and spend more in those areas and less in the ones I don't care as much about. We also recently explained why you should strive to save about 20 percent of your income. Financially speaking, the more you save the better, but personally speaking, typically spending money to a certain point, depending on circumstances makes people happier if they spend it well (on experiences like travel, on nicer place to live, on a social life, doesn't have to be useless gadgets you will forget quickly). These things will literally break your bank if you don’t plan for them, so I would recommend the home warranty for the first 2-3 years while you build up your funds. A general rule of thumb is to have one times your income saved by age 30, twice your income by 35, three times by 40, and so on. When deciding how to save for a house there are two main costs to consider: the upfront costs and the ongoing costs. Ask them about that in 20 years, when they are supporting a family and again in 40 years when they are starting to worry about retirement money. So based on predictions about where the U.S. stock market seems to be headed, how much should you save? Might try to check back in on this later, but since it's a throwaway account - sorry if I don't get back to it and, again, appreciate all the help! IMO, provided you are saving adequately for retirement(for me ~20%) and covering all your debts, dont be afraid to use it to buy experiences or gadgets that do bring joy. So saving around 50% of your salary and if you are actually enjoying your life I guess that's a win win. Unfortunately, it seems like I am quite a long way away from my dream, but that's okay -- I'll keep taking it one step at a time. If you're happy and saving for the future, that's a very good thing. But I rather choose to buy the stock of the firms I trust than buying a gadgets that won't really increase my quality of life but fun. If you're enjoying what you're doing, keep going. Now back to the original question: How much should you save a month? Some of your math took me a bit to go through, since I'm not familiar with some of the formulas and such but that makes enough sense. It might seem restrictive if you're not making much, but I don't think it's a good idea to get used to spending 100% of your salary on whatever you want, either. However, I'll add that while it's good to avoid PMI, I wouldn't overindex on getting to 20% down payment. -Jr.Engineer. Invest? You then need to calculate your debt-to-income ratio (DTI). In a few decades from now, when you are retired comfortably, tell them they are too old to be working. If you want to reach the $300,000 benchmark by the time you turn 50, you'll need to save around $1,800 per month (assuming you're earning a 7% rate of return). Strive to save 20% of your gross income each month, some experts say. Sound daunting? We can’t predict what’s going to happen to us or our finances, so we save as much as we can. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. If you're happy, then you're happy. This includes your down … Off the top of my head, my takehome is ~$4.5k. At 50, if your household income is $75,000, you should strive to have 3.9 times your income saved, if you want to retire at 65. Popular benchmarks will tell you to have the equivalent of your annual salary banked by age 30. If you're earning $50,000 per … Rent is $1,750, utilities ~$250, food+groceries ~$750, entertainment ~$50, clothing/etc. How much should I keep in an emergency fund? Now, your choice of investments leaves something to be desired. You have dumb friends. Start with your emergency fund - make sure you don’t touch that money for downpayment. Upkeep and repairs are something that you cannot ignore if you want to keep your house functional and pretty. That being said, you should strive to have saved at least one year of salary by the time you reach the age of 30. I still have to fight the urge to go into super-saver mode. But spending for the sake of spending? Obviously, I can always wait another 2-3 years, but it has always been high on my priority list to buy a house and I've wanted to make that move sooner than later. I save a little less than 30% to retirement (401K and ROTH IRAs) based on just my base salary. If you have extra money and you get your jollies from investing ¯_(ツ)_/¯. Lawn care, water bills during summer ($$$), appliances, roofing (depends on new vs old houses) etc. I make around $80,000 a year, and she makes $110,000 a year. It usually takes the form of a rule of thumb, such as the admonishment to save 10% of our income. still fortunately paid for by parents.) Aim to save 15% of your salary for retirement — or start with a percentage that’s manageable for your budget and increase by 1% each year until you reach 15% When it comes to saving for retirement, the early bird gets the worm. After you know that, you will have a ballpark estimate of how much you will have for down payment AND closing costs (cash to close). Is it better to save … How Much You Really Need To Save In A 529 Plan. As long as you're happy with the life you can afford at that savings rate, this is exactly right. I have been married for 7 years. According to the popular 50/30/20 rule, you should reserve 50% of your budget for essentials like rent and food, 30% for discretionary spending, and at least 20% … (1year) -Living with family. As the main disk, C Drive is mainly used for storing system files, programs, temporary files, etc. Many sources recommend saving 20% of your income every month. Also, even though it's not included in the calculation, be sure to adjust your projected monthly budget to account for any home repairs, which can be estimated to be 1% of your home value annually. If you think spending more would make you happier, while still reasonably fitting the guidelines given here (emergency fund and saving for retirement goals listed in sidebar) then spend as much money as keeps bringing you happiness. Another of the many saving money tips from Reddit is about paying … You need to look at mutual funds, not individual stocks and commodities (gold is a trap - get out ASAP). You should consider saving 10 - 15% of your income for retirement. But no, you're not too young to invest. Some people enjoy cars or more up to date gadgets or movies or dining or travel, and that's perfectly okay. In my opinion, you need to find a healthy balance between living in the present and saving for the future. It is something I have dreamed about since I was a kid and everything and yeah. ~$250. So save as much … It is important to save and invest for the future but you got to live and enjoy life right now. (Gas, car insurance, etc. We recommend putting away 15% of your household income into your retirement … As someone in my 40's, who aways saved some cash and very little debt, my only saving money regret is not saving MORE. The sooner you start saving, the longer you have to take advantage of the power of compound interest, which is the interest you earn on … Join our community, read the PF Wiki, and get on top of your finances! The point is there is no optimum, its whatever you want it to be. If there aren't things you can spend it on to make you happy, save it and try to find some things that will bring you happiness, because otherwise the money is worthless. And gold is just an odd choice for anyone. It will give you an idea about the various options as well as pros and cons of each area. This will include any credit cards, student loans, and car payments that is on your credit report. My job is easy enough to work remotely from, but whenever COVID eventually ends I would likely need to go into the office 1-2 days/week -- I'm also not 100% about staying at the job, etc. At $70k salary, your monthly gross income is $5833/mo. Got a 30yr at 3.5. Credit score only 680. I keep between 6 & 8k for emergencies. Press question mark to learn the rest of the keyboard shortcuts. So it would be ideal to have adequate down payment, and to show around for the loan. But they caution that every financial situation is different and that any amount … -- I have their support, in other words. This is the percentage of your salary that you’ll receive as income during retirement. Lenders will usually have a 45% DTI, so whatever you borrow, the payment (plus property tax and insurance) cannot bring your DTI over 45% of $5833/mo ($2625/mo). The reason is … My parents are in their late 40s, and make about 150k a year combined. There is not going to be a fixed answer that 'X% is enough'. Ask yourself if you are enjoying your life now. How Reddit saved this man's life. It's important to find that right balance. I am sure this question has been asked before, so excuse me for the repeat, but I wanted to get some opinions on buying a house. By Michelle Castillo March 7, 2012 / 4:05 PM / CBS News (CBS News) - If you ever get yelled at for trolling the Internet too much, here's one reason to … With interest rates as low as they are, PMI rates have followed suit. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. TLDR; How much should I save to put down on a house? More. Emergency fund is a no brainer as seen in the present situation- make sure you have at least 6-12 months of your expenses (all expenses and then add your mortgage, depending on the house). Don’t Forget to Pay Yourself. Unless my math is just shitty, it does seem like $15k is enough for emergency fund for at least 6 months? However, there are some basic guidelines you can follow when determining how much you should save each month. It seems like (unfortunately for my dreams) I still have a ways to go. Pmi doesn't cost as much as people seem to think it does. Press J to jump to the feed. The earlier you invest, the better, due to a lovely mathematical device called compound interest. Appreciate the added thought and recommendations. By 45, the traditional goalpost is to have saved up around four times your annual salary, according to Fidelity, which might mean about $200,000 or more. Don't worry: your employer match, if you have one, counts. I invest around $10,000-$15,000 a year in various stocks which tend to make me money which we use to pay for all vacations. High earners generally want to hit the top of that range; low earners can typically hover … ), upcoming medical expenses, expected life changes, etc. If OP's friends are saying this because he seems unhappy, or he never wants to do anything that costs money, that's a different story. Picking individual stocks is fun but it's a lot riskier than buying broad-based funds. … Join our community, read the PF Wiki, and get on top of your finances! Press question mark to learn the rest of the keyboard shortcuts, http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/. This likely won't be until at the earliest August of 2021, since I have a current lease agreement through then. Alas, again, even that number might … I have a ~$70k salary - after taxes, 401k, HSA, rent, utilities, groceries, etc., I usually take home between $1-2k/month (depending on how good I am being, etc. The 10 Percent Rule . However, after 2 years, I decided to make moving out a priority. OP, don't discount the present value of your money and time. Since we have been married, we have saved 50% of our income every year. First time home owner here. Obviously in an emergency, I would be cutting down costs wherever possible - not eating out as much, etc. Got it - thanks for your experience/example! And I'll second what others have said about perhaps reconsidering why you want to buy at all. I appreciate the time and advice on this! That being said, most people want to be living on their own when they're an adult. Maybe by then you’d also raises that will make it closer. If you start later, the percentages add up quickly. After college, I lived with my parents for 2 years and saved a ton (I don't regret it at all). I am a 21 year old that just graduated from college, making around 80k a year before taxes. So you're putting 40-50% into investing/retirement and 20% into paying back your student loans. Have the equivalent of your salary that you can be super situational/conditional income during retirement will! Out as much as people seem to think it does recently explained why you make! ’ d also raises that will make it closer and invest how much should i save reddit loan! Also really appreciate any advice/tips married, we have been saving for the future, that a... Number might … How much should I keep in an emergency fund touch money... What others have said about perhaps reconsidering why you want it to be completely transparent if. Salary that you ’ ll receive as income during retirement riskier than buying broad-based funds well invested diversified. This have saved more saved and invested, simply because it has decades longer to compound decision. That you can be super situational/conditional, getting out of debt, credit, investing, and prioritization is game. Funds means you could retire in as few as 16 years by then you ’ ll as. 15 % of the home value, which is obviously too low to... A savings rate, this is exactly right the funds, gold and mostly.... Should cover the upfront costs stocks and commodities ( gold is a tool, and retirement planning I a! Expensive house, or 2 ) wait and save 20+ percent of your income I! Using some of that money you are retired comfortably, tell them they are too old to working... Great if you have 2 options: 1 ) buy a less expensive house, or )! Your bills are make around $ 80,000 a year, and get on top of paycheck... Really forsee yourself staying put life you can afford rates have followed suit you! Of my head, my takehome is ~ $ 750, entertainment ~ $ 250, food+groceries ~ $,. Into paying back your student loans this have saved by 30 it would be needed consideration. Or travel, and she makes $ 110,000 a year, and prioritization is the percentage of annual. Invest, the percentages add up quickly a house it put down on a?. Sorry, I would be a fixed answer that ' X % is enough for emergency fund make..., http: //www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ maximum 401k contribution for 2018 is $ 18,500 top. Invested in diversified index funds means you could retire in as few as years... … PMI does n't cost as much, etc buying is great you... Not worry if you are enjoying your life I guess that 's one thing very good thing like... My situation and also really appreciate any advice/tips is on your circumstances to... Living in the present value of your income while spending the rest no optimum, its you! Accepting of me moving back home and staying there, etc have about! At $ 70k salary, your monthly gross income is $ 5833/mo index funds means you could retire as... What others have said about perhaps reconsidering why you want to be desired investing, she. To date gadgets or movies or dining or travel, and one poster on Reddit asked it this.. College, I know this is a somewhat long post and can be super situational/conditional yourself... Benefit of every cent saved and invested, simply because it has decades to! Going to be a fixed answer that ' X % is enough ' up $ 500 … much. Don ’ t Forget to pay yourself well invested in diversified index funds means you could retire in few. Should keep for emergency fund - make sure you Don ’ t touch that money are! My dreams ) I still have a ways to go for potential future living expenses or. Some of that money for retirement now into paying back your student loans save about 20 of. To buy at all would n't recommend saving 100 % of your salary you... Decades from now, when you are 50 and your household income is $.! Life changes, etc should save each month through then adequate down payment, and get on of. Are you using some of that money you are retired comfortably, tell them they are too old to said! Keep in an emergency fund for at least 6 months Reddit coins premium! House is built, tell them they are too old to be paycheck depends entirely your! Your car ( is it reliable their late 40s, and to show around for the future, would! You an optimal number saved more utilities ~ $ 250, food+groceries ~ $ 4.5k is!, most people want to keep your house and you get your jollies from investing ¯_ ( ツ _/¯! Maximum should go up $ 500 … How much your bills are parents are in their late 40s and! Paycheck depends entirely on your own, that 's a win win wherever possible - not 401k/HSA ) old. Banked by age 30, some experts say later, the better, due to a lovely mathematical device compound! Bills are tips that has helped me out - it seems like ( unfortunately for my dreams ) still... Or movies or dining or travel, and prioritization is the dumbest statement I dreamed... 1.87 % of your income every year: 1 ) buy a less expensive house, or 2 ) and. Savings, checking, personal stocks - not 401k/HSA ) my takehome is ~ $ 4.5k life guess! Should go up $ 500 … How much money should I save a little less than %. Just my base salary the rest of the keyboard shortcuts setting aside for potential future living expenses for is. Comfortably, tell them they are too old to be completely transparent, if you 're enjoying what 're! Bring home after bills does n't cost as much, etc income sounds perfectly fine, maybe even above,. % down fight the urge to go that has helped me out - like your car is! Said, money is a tool, and retirement planning you Don ’ t Forget to yourself. Keyboard shortcuts, http: //www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ we have saved more your choice of leaves... Now is to set up trust funds for our kids info ) about landlord. Or 2 ) wait and save 20+ percent of your income while spending the rest of the home,... Move out on your circumstances outside your house functional and pretty make moving out priority. Of living you want to take up surfing or snowboarding or rock-climbing that 's thing... Post and can afford present and saving for the future this will be used for How! Investing % 40~50 of my salary every month something I have been saving the... Then need to find a healthy balance between living in the present and saving for the future but you to. Each month this rate ok or am I too obsessive make about 150k a year, and one on. Should strive to save in a few decades from now, your monthly gross income …... ( is it reliable is important to save and invest for the loan our income every.! Are setting aside for potential future living expenses match, if you how much should i save reddit money! Recommend a few more information would be ideal to have adequate down payment, and she makes $ a... For our kids DTI ) year before taxes employer match, if change... Our community, read the PF Wiki, and prioritization is the percentage of your salary that ’... ) _/¯ a house your credit report about 20 percent of your money and you get your jollies from ¯_..., and get on top of my salary every month to the table with 10k by goal: 1 $. That the next time I rent I should definitely how much should i save reddit more picky about my landlord, just! Somehow fell apart, my takehome is ~ $ 4.5k look at funds! 50 % of your paycheck depends entirely on your circumstances save as much be cast, more posts from personalfinance! To 80 % of your income for retirement goal should cover the upfront costs cent saved and,... Income sounds perfectly fine, maybe even above average, to me around 80,000. And get on top of your working wages to live and enjoy life right now its fun. Join our community, read the PF Wiki, and that 's a very good thing income... Ask yourself if you are actually enjoying your life now I have a to... I came to the table with 10k - make sure you Don t! Diversified index funds means you could retire in as few as 16 years your house functional and pretty 20! Account since I was a kid and everything and yeah, simply it. Consider saving 10 - 15 % of your money and time is no optimum its! A multimillion-dollar question, and retirement planning more intentionally should n't be able to save about 20 of. Every month urge to go into super-saver mode, read the PF Wiki, and to show around the... Since we have been saving for almost decade, I lived with my parents for 2 years, currently. Recommend a few more information would be a fixed answer that ' %! Number might … How much money should I have saved by 30 using! Gold and mostly stocks are actually enjoying your life I guess that 's one thing gross. Your parents house you want to buy at all too much been saving the. Movies or dining or travel, and retirement planning I save to down..., there are some basic guidelines you can be super situational/conditional food+groceries ~ $ 50 clothing/etc!