The average person living in America will not have enough money saved by the time they reach 40 years old. The number of families that are not financially prepared is shocking. I have found multiple ways to start saving money for your family. In this article, I will show you how to save money and how much you should save by the time you are 40 years old.
Statistics on saving people are scary
The average savings of someone living in America is 6.1% of their income. 40% of the American population is not able to save anything at all. Families save between 30% and 50% of their salary. This means there are families that save 0% from equaling an average of 6.1%.
There are many people who miss the opportunity to save accordingly. If you do not have a proper plan in place to save money, you will reach the end of your thirties with nothing saved for the future. Upon doing further research, I found that more than 1,000 people Google how much money to have saved as an adult. With this many people hungry for knowledge, I decided to find the facts and share them to help others prepare.
How much must be saved at 40 according to experts
How much money should be saved according to age? There are many different theories surrounding this question. Thankfully, I came across a formula that I found simple enough to highlight. This formula was prepared by finance expert Kimmie Green. She states that someone who is 40 years old should have saved the equivalent of 3 times their annual salary.
This means, if your annual salary is $20,000, then you should have $60,000 saved by the time you are 40 years old. According to Green, at age 30, you should have saved your annual salary. Once you have the correct amount saved, you should add that amount to your account every five years. I know this seems like a lot, but with some self-control, it can be done.
Thus, at 40 you will have three times your salary, at 50 you will have five times your salary, and at 65 you will have eight times your salary.
To achieve a goal like this, you must save 20% of your annual salary without investing your money.
However, the amount of money you have saved at age 40 or any other age is not the only matter of importance. What you do with that savings is vital for the future.
When saving money over a long period of time, there are a few things to look out for—one of those being inflation. Inflation is the steady increase in the price of goods and services over time. In return, this lowers the value of the currency. Keep an eye on the monetary value of your savings account. Inflation is not always a bad thing. For an economy to be stable, it needs a stable amount of inflation.
Really important
- Make a plan!
- Control your finances.
- Save and invest money to be free!
- Follow your own path, and you will accomplish your own goals.
- It is not the amount of money you have, but the freedom that it gives you.
- Having money saved gives you freedom and peace of mind. This alone is priceless.
All in all
There are many reasons to save money. The future is unpredictable! Having a healthy amount of money in savings will give you a cushion to rest on. You never plan on a trip to the emergency room or a flat tire. These unforeseen circumstances can be detrimental to finances.
The only way to save ourselves from worst-case scenarios is to start saving today!
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