ST. LOUIS — Managing money can be challenging, especially when your sights are set 10, 20 or even 50 years down the line. Even people who have built up savings for years could still use help.
“A lot of people don’t save enough,” said Pier Alsup, chief community engagement officer for Together Credit Union. “They don’t set up a budget for themselves, which is the first part of savings.”
Budgets are tailored to the individual, but all should reflect three numbers:
- 50% of income should go toward needs, like housing or transportation
- 30% of income should go toward wants, like streaming services or dining out. Home cleaning and maintenance also fall under this category.
- 20% of income should funnel into different savings accounts or go toward paying off debt.
While there are many types of savings accounts, Alsup advised establishing an emergency fund first. This account should hold 3-6 months in expenses and fluctuates over time. During the pandemic, many families have realized how important this type of savings fund is.
A person’s lifestyle will impact their retirement savings accounts. A general starting point is to have your total income saved up by age 30. Every five years, a person should aim to put that amount toward their retirement savings.
When saving up for something specific, like a house or child’s education, financial advisors can help map out a plan.
For those who struggle with putting money aside every paycheck, Alsup recommends automation.
“You can have that amount taken out of your payroll or other accounts, and you don’t touch it,” she said.