How Much Money Should I Have Saved by My 20s and 30s?

Highlights:

• The average savings for people in their 20s and 30s varies widely based on earnings, lifestyle and other factors. So, it's important to set savings goals that are proportionate to your income.
• One popular strategy is the 50/30/20 rule, where 50% of your income goes to needs, 30% goes to wants and 20% goes toward paying debts and building savings.
• If you're behind on saving in your 20s and 30s, keep a close eye on your monthly expenses and consider a savings account that takes advantage of compound interest.

When it comes to building savings, the sooner you start, the better. Saving money in your 20s and 30s can be an important step toward long-term financial goals such as buying a home or funding your retirement.

However, when you're just starting your financial journey, saving money can be easier said than done. Here's how to estimate how much money you should aim to save in your 20s and 30s — plus a few strategies to consider if you find yourself falling short of your goals.

Setting savings goals at every age

The average savings for people in their 20s and 30s varies widely based on earnings, living expenses, debts and overall lifestyle. So, there's no single dollar amount that can fit everyone's financial situation. Instead, aim to set savings goals that are proportionate to your income.

For instance, once you start saving, it's a good idea to prioritize building an emergency fund. Also called a rainy day fund, an emergency fund is a reserve of money used to cover unplanned expenses, such as a sudden illness or an unexpected car repair. It's generally recommended that you save between three and six months' worth of expenses for emergencies. For example, one person spending $1,500 per month might need to save $4,500, while another person spending $2,000 per month might aim for a rainy day fund totaling $6,000.

Building your savings gradually over time is the best way to meet your financial objectives. But how do you set those objectives and how much cash should you set aside?

One popular rule of thumb is the 50/30/20 rule. With this strategy, each month you aim to spend 50% of your after-tax income on needs (necessary expenses such as your housing costs, groceries and utility bills), 30% on things you want (such as entertainment, eating out and travel), and the last 20% on paying debts and building savings.

Here's how this strategy might look to help you work toward attainable financial goals in your 20s and 30s.

How much money should I have saved by 20? By 25?

When you're in your early 20s, you may be pursuing an education or trying to get your career off the ground. Some of your living expenses may be covered by a parent or guardian, though this isn't always the case. In general, you're still establishing your career at this age, so you may not have the financial security of workers older than you.

While it would be ideal for young adults to set aside 20% of take-home pay for savings, between student loan debt and a limited income, this goal might not be realistic. If you're working with a tight budget, aim to save as much as you can, even if you can't stick to your 20% goal. As your career progresses and your spending power goes up, be sure to increase the amount that you're putting toward your savings. The steps you take in your 20s can help set you up for success down the line.

How much money should I have saved by 30? By 35?

Generally speaking, by the time you reach your 30s, you'll be more settled in your career and earning more than you did throughout your 20s. However, you'll likely be looking toward major financial obligations such as funding a wedding, buying a house, or having children. You'll also need to consider your retirement needs.

By 30, you'll want to make sure that you have a solid emergency fund in place. Experts also generally recommend that by age 30, you should have built one year's worth of salary in retirement funds. This includes money in your savings account, as well as any retirement accounts such as a 401(k) or an IRA.

If you find yourself successfully balancing multiple savings goals and there's room in your budget, you might consider increasing your 20% savings contribution to a higher amount. Also, evaluate your current spending and savings habits to identify additional opportunities to adjust your savings strategies.

How to save more money in your 20s and 30s

If you're struggling to meet your savings goals in your 20s and 30s, these strategies may help:

• Keep an eye on your monthly expenses. Put together a detailed budget that includes your monthly after-tax income and expenses. Watch for any unnecessary spending and cut down on whatever you can. Then, redirect that money into your savings account.
• Automate your savings. Many banks and other financial institutions offer the option to automatically set funds aside any time a deposit of a certain size is added to your account. For example, you might set up automatic savings contributions of $100 every time your employer deposits a paycheck above $1,000.
• Use savings buckets. Try refining your savings goals by maintaining separate accounts for different needs. For instance, you might open one account for short-term savings, another account for an emergency fund and a third for a down payment on your first home. That way, you can easily track your balances across different savings accounts and avoid dipping into funds earmarked for another purpose.
• Leverage the power of compound interest. Consider putting your cash in a high-yield savings account or a certificate of deposit (CD), both of which allow you to take advantage of compound interest. In other words, any interest you earn is applied to your principal savings balance so that you then earn interest on your interest. Utilizing these savings tools allows you to maximize your earnings from interest and amplify the value of your income.

Remember: While it's important to save money during your 20s and 30s, there's no one-size-fits-all solution. The most important thing is to identify your unique savings goals and work toward them gradually for long-term success.