Saving money is not everyone’s cup of tea. The importance of saving early comes to our mind when we have already spent so much on things we did not really need. So, how much should one save before reaching 30 years of age? This may sound like an easy question to answer, but it requires reassessment of your financial goals and your aspirations.
The amount of savings you should have before turning 30 depends on various factors such as your income, expenses, lifestyle, and financial goals. However, here are some general guidelines that can help you assess your savings:
Emergency Fund: Experts recommend having an emergency fund of at least 6-12 months of living expenses. This fund should be easily accessible in case of unexpected events like job loss, medical emergency, or car repair.
Adhil Shetty, CEO, Bankbazaar.com, says, “An emergency fund is money set aside to meet non-recurring expenditures, often emergencies that could squeeze your finances if you’re unprepared. These could be a sudden loss of employment, illness, an accident requiring treatment or repairs, damage to property, a friend in dire need, or something else. Always have a health plan, term insurance to cover your dependents after your life span, vehicle insurance to cover accidental damage, and property insurance to protect your home and properties.”
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Retirement Savings: It’s important to start saving for retirement as early as possible. By the age of 30, you should aim to have saved double the amount of your annual income as your retirement fund. The more the merrier.
Debt Repayment: If you have any high-interest debts, such as credit card debt or personal loans, you should focus on paying them off before building up savings.
Savings for Goals: If you have specific financial goals such as buying a home or starting a business, you should aim to save for them separately.
Overall, there is no one-size-fits-all answer to how much savings you should have before turning 30. The most important thing is to establish good saving habits early on and strive to save as much as you can while also balancing your expenses and financial goals.