Financial experts often say that to have a strong financial future, you need to start saving early and often. Even if you can’t save much right now (or have student loan debt, car payments, or another financial burden), you should find some way to put money away. A savings account is one of the easiest ways to start squirreling away funds — even if it’s just $20 a month. But how much is that really worth? Is 20k in savings good?
Is 20k in Savings Good?
It all depends on your financial situation, but I would say 20k is a healthy saving for anyone. If you have that much in savings, it means your spending is under control and you are on the right path to financial independence. If you’re only 20 years old, I would say that 20k is a great start and something to be proud of. It’s not easy to save money when you’re young and just starting your life, but if you can do it, then congratulations. I started saving at 22 and I barely reached 10k
Why Is 20k in Savings Good?
1. It’s Not All About The Money
The financial experts and financial gurus say that you need to save at least 20k in savings before you can retire. At first, I thought it was because they just wanted to get their money out of your hands and into theirs as quickly as possible. But after thinking about it more, I think they are right. Saving 20k is a good amount of money to have saved up when you are young and starting a career or starting your life. It’s not too much money, but it’s also not too little — it gives you the chance to start saving for retirement and other goals in life.
2. It’s A Good Start
Even if you only save 20k, it shows that you are serious about your financial future and that you are willing to put some money aside. Saving 20k means that you can afford to pay for your car insurance, car payments, student loans, and other bills each month. It allows you to be able to buy a house or apartment in the future — which means more money to invest in the stock market or start an investment account.
3. You Can Improve On 20k Later
So saving 20k isn’t a bad thing at all. But saving more is even better: You can always improve on your savings goal by increasing it over time. If you decide that saving $50 a month is too much (it might not be), then increase it to $75 or $100 a month. Or if you decide that saving 10k early is too little (it might not be), then increase it later overs, more furniture, and a lot of things that come with buying a home. It also allows you to save for other important financial goals, like college or retirement.
3. It’s A Good Start For Retirement
If you can save 20k, it means that you have the financial security to start saving for retirement. When you are young with 20k saved up, it means that you have enough money to cover your living expenses. You can also start saving for your future, whether it’s college or retirement — and the sooner you start saving for those goals, the better off you will be in the long run.
5. It’s Important In Your Early Years
I know I said above that 20k is not too little or too much money — but if your goal is to get out of debt as quickly as possible and start building a strong financial foundation so that you can live well in your later years without having to worry about finances for your future financial success.
6. It’s Not That Hard To Save 20k
It takes a lot of work, but it’s not that hard to save 20k. If you don’t spend money on unnecessary things and you keep track of all the bills each month, the money should be there. Saving 20k is a good amount of money to have saved up when you are young and starting a career or starting your life.
7. It’s A Good Start To Retirement Savings
As I mentioned above, saving 20k is a good amount of money to have saved up when you are young and starting a career or starting your life. It’s not too much money, but it’s also not too little it gives you the chance to start saving for retirement and other goals in life. Most importantly, it allows you to start putting away some serious money for retirement so that in the future, you can in your life.
How to build your 20k savings
1. Commit To Saving A Small Amount Every Month.
The first step to building an emergency fund is committing to saving a small amount of money every month. Ideally, you should have a goal to save $250 per month. But if you’re just starting out, it’s best to start by saving $100 every month. Once you’ve saved enough to cover 3-6 months of expenses, you can start thinking about building your full-sized emergency fund. You can save money by reducing your expenses, cutting down on your monthly subscriptions, and getting your hand on some part-time work. You can also try asking your family and friends to contribute towards your savings fund. You can also consider taking a part-time job to increase your monthly income and help you save money faster.
2. Make A Budget And Stick To It.
Building an emergency fund requires a lot of self-discipline. You need to be extremely disciplined while making and sticking to your monthly budgets. Ideally, your monthly income should go towards your monthly bills and expenses. Then, you should allocate a percentage of your income toward your savings. If you’re still in school, you should also allocate a portion of your income toward your student loan repayments. It’s highly recommended that you use a budgeting app to keep track of all your expenses and manage your monthly budgets better. You can check out the best budgeting apps of 2019 here.
3. Deduct Your Debt Payments Automatically.
Once you’ve built your basic emergency fund, you can start saving towards paying off your debts. Building an emergency fund and paying off your debt are two completely different things. But the best way to save money towards debt repayment is by building a basic emergency fund first. You can use your emergency fund to cover your monthly expenses in case of a health or job loss. It gives you the necessary time and room to repay your debts faster. If you have credit card debt, a student loan, or a home equity loan, it’s best to pay them off as soon as possible to avoid paying any unnecessary interest on your loans. Ideally, you should set up automatic payments from your main checking account to your loan companies and credit cards. That way, you can ensure that you pay your loans on time every month.
4. Emergency Fund 101: 3 Accounts In 1 Step
As you’re building your emergency fund, you should keep in mind that your emergency fund is a diversified account. Ideally, your emergency fund should be made up of 3 accounts. The first account is your cash savings account, followed by a low-risk investment account, and a high-risk investment account. Your cash savings account is a part of your basic emergency fund. You can use this account to cover your basic living expenses until you’re able to get your hands on some more money. Your low-risk investment account consists of debt funds and other low-risk investments. And your high-risk investment account is your long-term savings account.
5. Automate Your Savings And Invest What’s Left.
Building an emergency fund is a long and tedious process. You might not see results for months or even years. Therefore, you have to remain extremely disciplined and committed in the long term. The best way to remain committed is to automate your savings. You can use online savings accounts to help you automate your savings and investment. These accounts allow you to schedule automatic deposits into your account on a regular basis. Most online savings accounts offer decent interest rates. Therefore, if you can’t avoid building a high-risk portfolio, you can use these savings accounts to help you earn interest on your savings.
A savings account is one of the easiest ways to start saving money. It is important to start saving early and as much as you can — even if it’s just $20 a month. Having 20k saved up can make a big difference in your life. It can help you avoid falling into debt and allow you to take care of unexpected expenses. It can also help you achieve other financial goals, like buying a house or traveling.