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The rule of thumb is that you should save 20 percent of your take home pay. That means that if you earn $7,000 per month, you should aim for $1,400 a month. If you earn $350 per week, you should aim for $70 a week. However, this may not work for everyone. How much you save depends on your individual finances and goals. For example, if you are paying rent or have a mortgage, or if you’re paying down debt, your expenses will be higher when compared to someone who is living free of rent/mortgage or debt. Your saving patterns will, therefore, be different.
It is okay If you cannot afford to save 20 percent of your pay each time. The aim is to find a balance between saving and meeting your immediate needs. Whether you can save 20 percent or 5 percent, starting with any amount is better than nothing. The key is to save some portion of your income and gradually build up your savings.
Lydia R. McCollin, FCCA, FCA, is the Managing Director of LRM Consulting Services Inc.
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