How Much Money Should You Have in Savings?
July 7, 2021 | Daniel Dewitt
When thinking about your future, money plays a big part. Whether it’s buying a home, car, or finally starting that business venture you’ve always wanted to, you’ll need some sitting around. Exactly how much money should you have in savings? We’ll tell you how you can find the perfect number for you and your financing goals.
How Much Money Should You Have in Savings? – 2 Golden Rules
When considering how much money you should have in savings, first think of your income and your monthly expenses. You’ll find that there are some things that have to be paid, including utilities, car or house payments, and food. At this point, don’t factor in extras so you can really see how much you need.
1. The 50 30 20 RuleOne of the most popular rules that financial experts recommend sticking to is the 50-30-20 rule. According to this rule, your savings should contain at least 20% of your income, while 50% of it should go to your needs, 30% - to discretionary items. Having more money for savings is fine, but less will definitely take longer to save.
2. The 3X Rule Principle
One golden rule for finding how much money you should have in savings is to consider the 3X rule. Whatever your monthly expenses are, try and have three times that amount put up at any given time. So, if you’re monthly expenses are $2000, you should have at least $6000 in savings.
While losing a job or falling into an emergency is not something that we plan for, it can happen, and having money to hold you up until you find another job could be a lifesaver.
How to Grow Your Savings
If, after calculating how much money you should have in savings, your number is higher than your budget allows, then you might need to think of some ways to grow your savings. There are lots of options out there, some that you could start doing today.
1. Find Reductions
When we start paying attention to our money, we start to realize where it goes. Dinner here and a night out there add up and could be taking away from cash to add to your savings. So, find places where you can reduce and do it, maybe making lunch, eating in, and finding fun activities you can do at home.
2. Passive Income
If you realize that you have some downtime to spare, why not take up a small passive income job? The web is filled with options to earn cash, including taking surveys, becoming an affiliate, and even taking stock photos.
3. Automatic Savings
Every time you get paid, you can automatically have some of that money transferred to your savings account through your bank. If the money is immediately transferred from your bank account, it will be easier to manage in your budget. You can even arrange with your employer to have them send part of your direct deposit paycheck straight into your savings account! There are are also apps that will round up your purchases to the nearest dollar so you can save pennies at a time (which is hardly felt, but adds up quickly).
If you have an emergency arise before you have saved up money, you could try getting a fast short term loan. There are a couple types of loans you could look into, both of which we have more details about below.
Online Payday Loans
Online payday loans are a short-term kind of loans that can help you stay afloat until you get your next paycheck. When you’re starting to build up your savings, online payday loans can help, keeping you from running out of money until your next check comes.
How Do Payday Loans Work?
The concept is easy. You submit the required list of documents to a lender, and based on your income and repayment capabilities, you’ll be offered an amount of cash that you can get. Typically, payday loans are supposed to be paid off when your next paycheck comes in.
Choosing a solid lender is a key, so go for one with awesome features like Cash Cow. You can score money in as little as 30 minutes and get up to $300. All you have to have is an ID and a pay stub to prove your employment.
Title loans will put a bit more in your pocket, giving you an option of up to $1400. However, with this kind of loan, you’ll have to have a vehicle with the title in your name. As long as you have that, you can take out a small loan and use it toward building up your savings account, getting cash in hand in as little as 30 minutes.
How Do Title Loans Work?
The process of getting a title loan is similar to payday loans procedure. The only difference is that title loans use the value of your vehicle to give you the amount you’re eligible to get. You bring your required items and your car to a lender, and after a quick car inspection, a representative will let you know of the amount you qualify for.
Advantages of Title and Payday Loans
Piling up enough cash to keep you secure in case of an unforeseen circumstance could be a challenge for some. Not everyone has a lot of disposable income at the end of each month and may take longer to save up. That’s just one reason why an online payday loan in Louisiana or a title loan can come in handy. It is there for you if you haven't saved up enough yet. Other advantages include:
- Speed – with a title loan or payday loan, you can quickly get the money you need the same day
- Credit Doesn’t Matter – with online payday loans and title loans, you can still be considered for a loan even with bad credit or no credit.
- Micro Amounts – Taking out a large loan is a lot of responsibility. A small loan instead is easier to pay off and just the right amount to boost up your income.
Start Your Rainy-Day Fund, Today
It’s always a good idea to have some money set aside just in case. You never know what could happen and, with a savings account, you can rest assured that you’ll have something that kicks in when you need it the most. Find out how much you should save and take steps to start today.