How Much Should I Save in My 20s, 30s and 40s?

Little kids often dream of all the fun things they’ll do when they grow up. Most likely, those dreams don’t involve an emergency fund, a new roof or retirement.

Once adulthood hits, however, people realize how many financial demands there are—insurance, a house, kids. They wonder, “How much should I have saved to afford all the things I need?”

Your life—and financial priorities—change in your 20s, 30s and 40s. There may not be one right answer to, “How much should I have saved by 35?” or “How much should I have saved by 40?” But there are some helpful guidelines to help you save—so you can afford your “needs” and have money left over to enjoy some of those “wants” as well.

How much money should be in the bank?

When you retire, you no longer make a steady income. Retirement savings help you have enough money to live comfortably during those years. Experts say that ideally, people should save the amount of their yearly salary by age 30¹, and then increase by one salary amount every 5 years (salary times 2 by age 35, salary times 3 by age 40 and so on). This retirement savings by age chart² gives an example of how much to save for retirement by age 30 through 60.

Using an annual salary of $40,000, here’s the ideal savings:

However, this chart is a guideline, not a rule. Each person’s financial goals may be different. And you can’t always plan for life’s surprising turns.

Having savings can, however, help provide a cushion for some of life’s bumps. And like with any big project, building this fund is all about having a plan and sticking to it:

How to save wisely during your roaring 20s

Research shows that the answer to “How much should I have saved by 30?” is a year’s salary³, which means 20-somethings should aim to save about 25% of their gross pay (the amount before taxes and other deductions⁴). That figure includes 401(k) contributions and matching employer funds (if the company offers employer matching).

So a person earning $40,000 would put $10,000 each year into savings and use the remaining $30,000 for living expenses (and fun). If you can’t save 25%, don’t just throw in the towel. Start with 10% or even 5%—just get into the savings habit. An online savings account can be helpful because it’s easy to simply transfer money to savings. Even more helpful—setting up automatic contributions, so you don’t even have to think about it.

Here’s how you can build savings and good habits in your 20s:

• Start an emergency fund. An emergency fund is useful if you lose your job or have to deal with an unforeseen expense. Ideally, it should have 3-6 months’ worth of income. If that seems unachievable, start with a baseline of $1,000 and keep adding to it.

• Save for the future. You may not be thinking yet about saving for an engagement ring, the cost of daycare or how much to save to buy a house. But if these events might be in the future, it’s helpful to start saving for them now.⁵ And consider high-yield savings accounts, money market accounts and CDs, which may offer better benefits than standard accounts. Saving for retirement begins now as well. In addition to contributing to your 401(k), see if your employer will match your contribution.

• Create a debt-repayment strategy. Paying off credit cards in full is especially crucial now, because you’re beginning to build a credit score. A good credit score will be a big factor later for taking out a loan or a mortgage. However, don’t necessarily rush to pay back student loans.⁶ Frequently, they have a low interest rate. Plus, you can get a tax break on the interest you’ve paid. Consider making the minimum payments and putting any extra money in a savings account.

New house, bigger car, family vacation? How to save in your 30s

How much should I have saved by 40? While people may be earning more than they did in their 20s⁷, their expenses and financial obligations may have increased as well.

Many 30-somethings are getting married and starting families, so there are often competing priorities elbowing for attention: Financing a wedding, buying a house, outfitting the nursery or maybe taking some time to travel.

Here are some financial tips for your 30s:

• Avoid the “make more, spend more” trap. Yes, you may be making more now. But try to spend less than you make to help build savings and avoid debt.

• Imagine the future. Continue to sock away money for the big-ticket items, like vacation, home repairs or a new car. Consider opening separate savings accounts for each item. You may also want to increase your retirement savings⁸, either by contributing more to your 401(k) or opening up another retirement account, like a traditional or Roth IRA.

• Open a 529. It’s not too early to open a tax-exempt 529 account to start saving for college tuition.⁹ Average public college costs have increased to about $29,150 for out-of-state and $11,260 for in-state, and private colleges can average close to $41,540.¹⁰ Many people aim to cover about a quarter of that¹¹ (typically, student loans, scholarships or grants will cover the rest).

• Consider investing. Investing can help build your savings. You don’t need a lot of money to jump into the investing pool. “Micro-investing” apps allow you to invest with even small amounts of money, like the spare change from your coffee purchase.

This may also be a smart time to reevaluate your insurance needs to make sure you have enough coverage. And don’t forget to keep adding to your emergency fund.

How to be financially fit in your 40s

Your 40s are often the peak earning years.¹² Now may be a good time to ask for a raise or negotiate a higher salary if you’re starting a new job. If your savings account isn’t in ideal shape, consider a side job. Are you a whiz at photo books? Home repairs? Turn those talents into cash you can funnel into your savings account.

You may not feel “middle-aged” yet (hey, 40 is the new 30, right?) but it’s time to take a good look at your finances:

• Get rid of debt.¹³ It’s time to pay the piper. Pay off medical bills, credit card debt and any outstanding student loans. The goal is to free up money to use for saving and investing.

• Maximize retirement savings. In your 40s, you can contribute up to $18,000 in your 401(k).¹⁴ And if you haven’t done so yet, consider opening a traditional or Roth IRA.

• Continue adding to 529 accounts. Your savings needs may change depending on whether your child wants to attend a local college or has her heart set on a private, out-of-state college.¹⁵

• Plan for the future. Continue adding to that emergency fund. Think about creating a will, if you don’t have one yet. Estate planning and tax planning can also help 40-somethings save well now and live well in retirement. In addition, a long-term care insurance policy can offer peace of mind, since many Americans will need long-term care at some point.

• Talk to a financial planner.¹⁶ Many 40-year-olds find themselves with a bit more money than they had in the past. A financial planner helps people figure out what the next 10-20 years of their life (and bank account) should look like and how to achieve those goals.

Other financial tips for 40-somethings? If interest rates are low, refinancing your mortgage can mean a smaller monthly mortgage payment. And if you’re eyeing those retirement funds to help pay for college or a wedding, look away. You are getting closer to needing that money for retirement, and withdrawing that capital means lost income.¹⁷

No expiration date—these savings tips are smart at any age

Whether you’re celebrating your first paycheck or closing in on retirement, here are some helpful savings tips:

• Keep saving, even small amounts. Start with a modest amount and slowly increase it as you start earning more. Get into the habit of funneling any “extras”—like a bonus from work—into savings. And try to add to your emergency fund every month. If you ever face an unplanned-for-crisis, you’ll be thankful that Past You was so prudent and provided that financial buffer.

• Pay off credit cards. Pay them off in full every month to avoid high-interest charges.

• Live below your means. A budgeting app or a good old-fashioned spreadsheet can help keep track of your income and spending.

Keep in mind that everyone’s savings goal—and journey—is different. There’s no “right” amount or “right” way to save—just what’s right for you. And every dollar in that savings account helps. If you can “stay calm and keep saving,” you’ll hopefully be less stressed about money.

One last tip: While you are trying to hit those “how much should I have saved by…?” benchmarks, don’t forget to have some fun. The key is balance: Saving money is important, but so is enjoying those hard-earned dollars.