We all know that building a savings account is a must, but it can be hard to understand what an ideal dollar amount is to have in savings. The answer is dependent on where you are in life and what your plans are for the future. Working towards a robust savings account, whatever that means for you, is a good goal. If you do not have a savings account that you contribute to, about 71% of people in the U.S. have a savings account, so it's time to hop on the bandwagon.
It all starts with a good budget. Being able to correctly budget is a skill that takes some time to perfect. If you do not have a lot of budgeting experience, it could be extremely helpful to reach out to a financial professional for advice. It could even be beneficial for those of you whose financial situation has changed. Reevaluating your finances at different stages in your life is important, but it is often forgotten.
Each month, you should put a specific amount of your income in your savings account. It is up to you how much that is, but even a small amount of money compounded every month can make a huge difference. Some companies offer an option where a predetermined amount of your paycheck will be directly deposited into a savings account. This is a good choice because you don't have to worry about doing it manually. If you have a savings goal, this calculator that The Federal Savings Bank offers can help you get there.
There are several factors at play when trying to determine your ideal savings goal. One of the most important things to consider is whether you are saving for a specific item or experience, or if you are just looking to maintain your accounts. If you are saving for a trip, a car, or potentially a new home, this makes budgeting a little bit easier. This is because you have a specific dollar amount in mind that you are trying to reach.
On the other hand, if you have no specific dollar amount in mind, you can still create a goal for yourself. It's commonly known that you should try to have up to six months of living expenses saved up in case of an emergency. Take into account rent, bills, food, gas, and any other basic necessities. It can take a while to build up to this ideal, but once you have, don't shy away from saving even more, if possible.
Outside of saving three to six months of essential spending, you should try to add a 30% buffer to your savings account. Once this has been achieved, consider talking with a professional about how you can save any extra income.
There is not a singular answer when it comes to how much should be in your savings account. Your age, marital status, financial and personal goals are all important components of your ultimate savings goal. Reach out to The Federal Savings Bank to start planning your savings journey now!