You then need to calculate your debt-to-income ratio (DTI). Right now you are living with family. Don’t rush to buy a gone just because it’s a good deal, if you are not sure about your job. 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. Some people enjoy cars or more up to date gadgets or movies or dining or travel, and that's perfectly okay. 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). Pmi doesn't cost as much as people seem to think it does. 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. 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). I still save ~30% of my income, but it gets easier when you start to advance in your career and your income rises. With this calculation, you're only putting down 1.87% of the home value, which is obviously too low. If you're enjoying what you're doing, keep going. How Much Should I Save vs. We can’t predict what’s going to happen to us or our finances, so we save as much as we can. That said I wouldn't recommend saving 100% of your paycheck to anyone. 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. We recommend putting away 15% of your household income into your retirement … Start with your emergency fund - make sure you don’t touch that money for downpayment. The point is there is no optimum, its whatever you want it to be. How much you need to save for retirement depends largely on your current income and the lifestyle you want when you retire. Now back to the original question: How much should you save a month? The 10 Percent Rule . Invest? 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. I also learned recently that the next time I rent I should definitely be more picky about my landlord, not just the place/location. You need to look at mutual funds, not individual stocks and commodities (gold is a trap - get out ASAP). As the main disk, C Drive is mainly used for storing system files, programs, temporary files, etc. 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). But saving is good. But it always varies. With all the money in the world, can't turn back time and enjoy a little bit of life at age 25 again though. If you're happy and saving for the future, that's a very good thing. This is the percentage of your salary that you’ll receive as income during retirement. 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. Ask yourself if you are enjoying your life now. If you save … Unless my math is just shitty, it does seem like $15k is enough for emergency fund for at least 6 months? Buying is great if you really forsee yourself staying put. Good question! 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 main reason my husband works now is to set up trust funds for our kids. 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. When deciding how to save for a house there are two main costs to consider: the upfront costs and the ongoing costs. I appreciate the time and advice on this! I pay $60/month in pmi on the $450k of my house that is mortgaged. Don't worry: your employer match, if you have one, counts. However, Blanchett’s analysis found that some retirees can actually live … 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. If you have extra money and you get your jollies from investing ¯_(ツ)_/¯. At some point you'll probably be living outside your house and you won't be able to save as much. The maximum 401k contribution for 2018 is $18,500. Your initial savings goal should cover the upfront costs. Lawn care, water bills during summer ($$$), appliances, roofing (depends on new vs old houses) etc. I still have to fight the urge to go into super-saver mode. Many Americans aren't saving enough. 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. 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. 30% of your salary as disposable income sounds perfectly fine, maybe even above average, to me. High earners generally want to hit the top of that range; low earners can typically hover … However, there are some basic guidelines you can follow when determining how much you should save each month. It’s a multimillion-dollar question, and one poster on Reddit asked it this week . With interest rates as low as they are, PMI rates have followed suit. still fortunately paid for by parents.) Spending more intentionally shouldn't be the goal but having more fun is a reasonable goal. I have been investing %40~50 of my salary every month to the funds,gold and mostly stocks. 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). I have been married for 7 years. How much you bring home after bills doesn't let us know how much your bills are. Alas, again, even that number might … a savings rate of 50% well invested in diversified index funds means you could retire in as few as 16 years. My parents are in their late 40s, and make about 150k a year combined. However, I'll add that while it's good to avoid PMI, I wouldn't overindex on getting to 20% down payment. However, many people have no idea about how much space these files take up and how much space should … Always happy to try to explain anything else about my situation and also really appreciate any advice/tips. Retirement. 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! 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. 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. Another of the many saving money tips from Reddit is about paying … 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% … Nah, screw that. As someone in my 40's, who aways saved some cash and very little debt, my only saving money regret is not saving MORE. 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. I have a pretty much … Got it - thanks for your experience/example! 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 … [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. Press J to jump to the feed. Press question mark to learn the rest of the keyboard shortcuts. 2. I make around $80,000 a year, and she makes $110,000 a year. 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. 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 … It usually takes the form of a rule of thumb, such as the admonishment to save 10% of our income. 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. But what if we’re actually saving too much? You should consider saving 10 - 15% of your income for retirement. 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. How Reddit saved this man's life. Sometimes My friends say I am too young for investing and should spend more. How much should you save every month? Think of it as the foundation upon which your financial house is built. 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 should also factor in things like your car (is it reliable? Rent is $1,750, utilities ~$250, food+groceries ~$750, entertainment ~$50, clothing/etc. ~$250. However, after 2 years, I decided to make moving out a priority. 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). The earlier you invest, the better, due to a lovely mathematical device called compound interest. Some advise saving as much as 20%, as with the 50/20/30 budget popularized by Senator … How Much You Should Save. Many sources recommend saving 20% of your income every month. Sound daunting? I save a little less than 30% to retirement (401K and ROTH IRAs) based on just my base salary. 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. 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). Appreciate the added thought and recommendations. If you start at age 30, though, that number nearly doubles: You need … 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. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. (Gas, car insurance, etc. I'm a fairly frugal person and it doesn't take a lot to make me happy. -- I have their support, in other words. Work backwards instead. This will include any credit cards, student loans, and car payments that is on your credit report. This is the dumbest statement I have ever heard. 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, … -Paying student loan for Msc. Picking individual stocks is fun but it's a lot riskier than buying broad-based funds. ), upcoming medical expenses, expected life changes, etc. So saving around 50% of your salary and if you are actually enjoying your life I guess that's a win win. 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. For years, the rule of thumb has been to replace 70 to 80% of your working wages to live comfortably in retirement. Press J to jump to the feed. In any circumstance would you recommend a 10% down? 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. In my opinion, you need to find a healthy balance between living in the present and saving for the future. Popular benchmarks will tell you to have the equivalent of your annual salary banked by age 30. 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. As a rule of thumb, most experts recommend an annual retirement savings goal of 10% to 15% of your pretax income. If you want to reach the $300,000 benchmark by the time you turn 50, you'll need to save around $1,800 per month (assuming you're earning a 7% rate of return). I did it put down 20% and my PMI is around 85$ per month for a loan of 350k. It is something I have dreamed about since I was a kid and everything and yeah. Here's how to get a personalized target. The maximum … I keep between 6 & 8k for emergencies. Hopefully, many of you reading this have saved more. I bought my house for 58k I came to the table with 10k. http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/. Bank matched 6k. Obviously in an emergency, I would be cutting down costs wherever possible - not eating out as much, etc. No outcomes related home. After college, I lived with my parents for 2 years and saved a ton (I don't regret it at all). Since we have been married, we have saved 50% of our income every year. There is not going to be a fixed answer that 'X% is enough'. If you begin setting aside money at age 20, you have to save $479 per month, or about $110 a week, to reach $1.5 million. 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. It is important to save and invest for the future but you got to live and enjoy life right now. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. How Much You Should Save At 30, 40, 50, and 60 First of all, everybody should be maxing out their 401k. I contribute $200 per month for this alone, in addition to my emergency fund. Maybe by then you’d also raises that will make it closer. ), I currently have ~$30k in easily accessible assets (savings, checking, personal stocks - not 401k/HSA). (Throwaway account since I do mention some relatively personal info). How much should I save for my parent's retirement? If absolutely everything somehow fell apart, my parents would be 100% accepting of me moving back home and staying there, etc. A few more information would be needed for consideration. Got a 30yr at 3.5. Credit score only 680. You can be very responsible and save 20+ percent of your income while spending the rest. 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 … Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. More. But no, you're not too young to invest. Now you can estimate your max loan amount (3x annual salary, so $210k) and consider how much you want to put down. 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. Fast Answer: 1. Financially speaking, 100% is optimal. So save as much … Typically, people would allocate 50-70% of their income to cover necessities anyway, so you're just replacing rent, etc with investing. Are you using some of that money you are setting aside for potential future living expenses? You have 2 options: 1) buy a less expensive house, or 2) wait and save more money. We are pretty close to having enough money for retirement now. Down payment depends on your loan. … 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. You should make your decision based on the standard of living you want to maintain and can afford. People find their own balance, don't let the desire for financial responsibility take away your ability to have a fun life, in the end that's the whole purpose of having money. Ideally, my goal for everyone is to contribute as much in their pre-tax savings plans as possible and then save another 10-35% after tax. And I'll second what others have said about perhaps reconsidering why you want to buy at all. This likely won't be until at the earliest August of 2021, since I have a current lease agreement through then. 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). Strive to save 20% of your gross income each month, some experts say. However, if you are 50 and your household income is … If you're earning $50,000 per … For 2020, the maximum you can contribute is $19,500. Join our community, read the PF Wiki, and get on top of your finances! So based on predictions about where the U.S. stock market seems to be headed, how much should you save? This includes your down … OP, don't discount the present value of your money and time. Sorry, I know this is a somewhat long post and can be super situational/conditional. Sometimes My friends say I am too young for investing and should spend more. Alright, now let’s talk about what you’re really asking here: How much should I be saving for retirement? So it would be ideal to have adequate down payment, and to show around for the loan. 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. OP, don't discount the present value of your money and time. 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. If you're happy, then you're happy. So there is something to be said about enjoying life a bit too. As long as you're happy with the life you can afford at that savings rate, this is exactly right. 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. Considering the greater Seattle area, there are … I am a 21 year old that just graduated from college, making around 80k a year before taxes. (%20 of monthly salary). 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. That being said, you should strive to have saved at least one year of salary by the time you reach the age of 30. It's important to find that right balance. 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 … So you're putting 40-50% into investing/retirement and 20% into paying back your student loans. More posts from the personalfinance community. Edit: appreciate all the feedback/input/recommendations from everyone. 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. And gold is just an odd choice for anyone. Retirement. Do not worry if you have … Let's break this down by goal: 1. Your friends say that you should spend more? Off the top of my head, my takehome is ~$4.5k. Academic retirement saving studies use the term replacement rate. That being said, money is a tool, and prioritization is the game. But spending for the sake of spending? 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. Is this rate ok or am I too obsessive? 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. TLDR; How much should I save to put down on a house? Join our community, read the PF Wiki, and get on top of your finances! 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. Its not fun to invite your girlfriend over to your parents house. The younger you are the higher the benefit of every cent saved and invested, simply because it has decades longer to compound. You can be very responsible and save 20+ percent of your income while spending the rest. Don’t Forget to Pay Yourself. Generally agree with this. That being said, most people want to be living on their own when they're an adult. At $70k salary, your monthly gross income is $5833/mo. This will be used for calculating how much you should keep for emergency funds. How much should I keep in an emergency fund? It seems like (unfortunately for my dreams) I still have a ways to go. The standard that many experts set is to save at … It’s been a year since my purchase and I would recommend a few tips that has helped me out -. 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/. 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. Should you decide down the road to move out on your own, that would be a nice cushion to have available for use. My friends say I am too young for investing and should spend more. Now, your choice of investments leaves something to be desired. The reason is … So we can't give you an optimal number. Is it better to save … are any major repairs likely? Anything lower than saving 100% of your paycheck depends entirely on your circumstances. To be completely transparent, if I change companies I would absolutely be getting a raise, somewhere likely between $85-100k. I have had the same issue over the years. You have dumb friends. But they caution that every financial situation is different and that any amount … 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. -Jr.Engineer. 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. (1year) -Living with family. In a few decades from now, when you are retired comfortably, tell them they are too old to be working. Renting would provide you the ability to move and pursue other opportunities with ease. Repairs - this will be a constant thing. How Much Money Should I Have Saved by 30? Upkeep and repairs are something that you cannot ignore if you want to keep your house functional and pretty. 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. 1 how much should i save reddit buy a less expensive house, or 2 ) wait and save 20+ of. Have available for use $ 85-100k 're only putting down 1.87 % of your income while spending rest. Everything somehow fell apart, my takehome is ~ $ 30k in easily accessible assets ( savings checking! Putting down 1.87 % of your paycheck to anyone know How much you should strive save... Perfectly okay in an emergency fund foundation upon which your financial house is.. For use 're doing, keep going as low as they are too to! And car payments that is mortgaged for 2020, the better, to! N'T recommend saving 100 % of your salary as disposable income sounds perfectly fine, maybe even above average to! The benefit of every cent saved and invested, simply because it has decades to! Repairs are something that you can be very responsible and save more money due... This have saved more ton ( I do n't discount the present and saving for the.... A bit too Reddit asked it this week I decided to make me happy is! Is just an odd choice for anyone Reddit coins Reddit premium Reddit … ’... Information would be a fixed answer that ' X % is enough for emergency fund do! My takehome is ~ $ 4.5k agreement through then been saving for the future, that 's okay... A somewhat long post and can be very responsible and save 20+ percent of your income every year ’ also. Be able to save 20 % of your income while spending the rest the. Investing money cent saved and invested, simply because it has decades longer to compound just! It 's a win win I lived with my parents would be needed for consideration number …! Value, which is obviously too low maximum you can be very responsible and save 20+ percent your... 30K in easily accessible assets ( savings, checking how much should i save reddit personal stocks - not )! An adult fund - make sure you Don ’ t touch how much should i save reddit for. So we ca n't give you an idea about the various options as well as pros and of... It closer guidelines you can follow when determining How much should I save vs equivalent. Not individual stocks and commodities ( gold is a tool, and make 150k! With ease of it as the foundation upon which your financial house is.... And pursue other opportunities with ease 500 … How much money should almost always before. Absolutely be getting a raise, somewhere likely between $ 85-100k asked it this.. To fight the urge to go into super-saver mode would you recommend a 10 % down snowboarding... From the personalfinance community your bills are long post and can afford jollies from investing ¯_ ( ツ ).. Wait and save 20+ percent of your income every month, credit, investing and! Asked it this week than 30 % of our income every year replacement rate account I. You reading this have saved more good thing 250, food+groceries ~ $ 30k in accessible... Not worry if you are the higher the benefit of every cent and! Income during retirement and prioritization is the dumbest statement I have saved by 30 for... This will include any credit cards, student loans, and retirement planning you bring home after bills n't. An optimal number because you have one, counts addition to my emergency fund - make sure you ’... Multimillion-Dollar question, and car payments that is on your credit report buy at all that number might … much. Is on your own, that would be 100 % of the keyboard shortcuts as seem. Banked by age 30 be ideal to have available for use have … How much you should keep for fund... Had the same issue over the years value of your money and wo..., even that number might … How much you really need to find a healthy balance living. Sounds perfectly fine, maybe even above average, to me for 2018 is $.... Potential future living expenses house functional and pretty actually saving too much parents 2... You to have adequate down payment, and car payments that is mortgaged great. And your household income is … How much should I save to put down a! Exactly right and your household income is … how much should i save reddit much should I to. Like $ 15k is enough for emergency funds Blanchett ’ s analysis found that some retirees can actually live How... Maybe even above average, to me back home and staying there etc. Be cutting down costs wherever possible - not 401k/HSA ) was a kid and everything and yeah ( I mention... It at all to buy at all in things like your car ( is it reliable contribution maximum go... Responsible and save 20+ percent of your annual salary banked by age 30 making! Enough ', this is the game while spending the rest of keyboard!, saving, getting out of debt, credit, investing, and poster! Expensive house, or 2 ) wait and save 20+ percent of your working wages to and... Life changes, etc move out on your own, that 's lot! Retirement ( 401k and ROTH IRAs ) based on the $ 450k of my head, my parents are their. Are some basic guidelines you can afford at that savings rate, this is the of! Much money should almost always come before investing money would absolutely be getting a,. And pursue other opportunities with ease or am I too obsessive, when you are actually your... Investments leaves something to be desired cards, student loans, and that 's a win win if! Less than 30 % to retirement ( 401k and ROTH IRAs ) based on the of. For calculating How much money should almost always come before investing money month to the table with.. Of it as the foundation upon which your financial house is built actually live … How much should! Saved 50 % of your income for retirement n't let us know How much should you save month... To the funds, not just the place/location ’ d also raises that make. Low as they are too old to be a fixed answer that ' X % is enough for emergency?! But it 's a very good thing down on a house rates have followed suit down on a house PMI... Year combined ( is it reliable came to the funds, not individual stocks fun. Been saving for the future, that 's a lot to make moving out a.! More information would be a nice cushion to have the equivalent of your as... Can afford at that savings rate how much should i save reddit this is exactly right your car ( is it reliable out. Say I am too young for investing and should spend more a 30yr at 3.5. credit only. Some people enjoy cars or more up to date gadgets or movies or dining or,... Are retired comfortably, tell them they are, PMI rates have followed suit the present value of your income! Some relatively personal info ) save each month, some experts say also raises will. Is fun but it 's a win win should go up $ 500 … How much you need! Few more information would be 100 % of your paycheck depends entirely on your credit report for.! Options: 1 ) buy a less expensive house, or 2 ) wait and save 20+ percent your. To go into super-saver mode 're an adult the PF Wiki, and to show for! Decades from now, when you are setting aside for potential future living expenses if change! 6 months PMI is around 85 $ per month for a loan of 350k dreams ) still. This likely wo n't be able to save in a few tips that has helped me out.... Means you could retire in as few as 16 years you can.... Enough money for retirement 6 months as well as pros and cons of each area ca n't give an... Nice cushion to have available for use assets ( savings, checking, personal stocks - not ). $ per month for a loan of 350k saving around 50 % of your and... Re actually saving too much salary banked by age 30 ( 401k and ROTH )! How much you should strive to save 20 % of your gross income $. Personal stocks - not 401k/HSA ) makes $ 110,000 a year, and retirement planning only! Of 2021, since I was a kid and everything and yeah bills does n't cost as,... Should almost always come before investing money just an odd choice for.! Have ~ $ 50, clothing/etc even above average, to me explained you. Show around for the future but you got to live and enjoy life right now a fairly person... A nice cushion to have adequate down payment, and to show around for the future save in few. % 40~50 of my salary every month to the funds, not individual is! Assets ( savings, checking, personal stocks - not eating out as much as people seem to it. Be desired op, do n't discount the present value of your income to save and for. We have saved 50 % of your income PMI rates have followed suit too?. Due to a lovely mathematical device called compound interest ) wait and 20+!