Jason Preti, CFP®
How much to budget for savings depends on what your goals are. It definitely starts with knowing your current required expenses and available income. How much is available after your needs are met and what types of goals and stretch goals you have will dictate what is available to save.
Creating a budget starts with setting up categories for Needs, Wants, and Wishes. Needs are your basic living requirements such as food, transportation, housing, utilities, retirement savings, as well as obligations for loans and credit cards. Next is your wants which could be entertainment, eating out, new clothes. Finally set up your wishes which naturally turn into the goals you want to achieve: down payment for a new house, new car, vacation, early retirement etc…
Once you have that set, setting up the monthly contributions to your savings account should be done automatically each payday. Preferably into an account that you don’t have tied to a debit card so once it’s put aside it will take more than a swipe to raid it.
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