How much "should" I be saving a month?

[Anonymous]

Working on a budget so DH and I can make some important decisions about childcare and what we can and cannot afford. We have high HHI (350Kish) but we also have a lot of debt (all student loan, low interest). What's a good rule of thumb (and something preferably not too complicated) for how much you should pay yourself first/save ideally a month?

I've heard 20% a month into savings is a good barometer and we're at that. Meaning, I've got a budget worked out where we pay down some student loan debt every month, plus have a nanny, plus put away about 24% of our take home income each month into savings (including retirement). Thoughts? Is this good? Bad? Basically trying to make sure we can afford a nanny without being financially irresponsible.

[Anonymous]

I focus on two different types of savings:

1) retirement
2) emergency

We save for other stuff, but those have always been critical areas. I've heard 10% for retirement to meet the basics. 15% to live comfortably. I'd save another 10% until you build up your emergency fund to cover 6-8 months of unemployment. (I think that's the current recommendation, given the sluggish economy and unemployment rate).

After that, I personally would focus on putting as much toward your debt as you can without living poor. The faster you pay of loans with interest, the more you save in the long run.

[Anonymous]

So long as you're meeting your debts and saving 10-15% for retirement, you are good.

[Anonymous]

Anonymous wrote:Working on a budget so DH and I can make some important decisions about childcare and what we can and cannot afford. We have high HHI (350Kish) but we also have a lot of debt (all student loan, low interest). What's a good rule of thumb (and something preferably not too complicated) for how much you should pay yourself first/save ideally a month?

I've heard 20% a month into savings is a good barometer and we're at that. Meaning, I've got a budget worked out where we pay down some student loan debt every month, plus have a nanny, plus put away about 24% of our take home income each month into savings (including retirement). Thoughts? Is this good? Bad? Basically trying to make sure we can afford a nanny without being financially irresponsible.

This question can't really be answered by anyone other than you. How stable is the income? What are the alternatives to having a nanny? How much savings do you have? What types of savings? College Savings? Do you own a home? Are you planning to buy a home? What would you do in an emergency? What is the interest rate on the student loans? Could you pay the student loans plus all other expenses if you lost your job? What percentage of your take home is discretionary spending?

We used to have about that in HHI and we saved about the same as you, and I wish we had saved more. We are fine, but we have made decisions that ended up cutting income, and we had to go through some tighter (not tough, but tighter) times. In retrospect, I wish we had gotten rid of all the debt and save a bigger cushion (i.e., at least $250k in non-retirement) when we had the chance. Instead, we ended up realizing that we didn't have quite as good of an emergency fund as we wished after we had cut the income, thus squeezing much more to get to a comfortable place.

[Anonymous]

Anonymous wrote:I focus on two different types of savings:

1) retirement
2) emergency

We save for other stuff, but those have always been critical areas. I've heard 10% for retirement to meet the basics. 15% to live comfortably. I'd save another 10% until you build up your emergency fund to cover 6-8 months of unemployment. (I think that's the current recommendation, given the sluggish economy and unemployment rate).

After that, I personally would focus on putting as much toward your debt as you can without living poor. The faster you pay of loans with interest, the more you save in the long run.

This is helpful, thanks. Forgot to mention we have about 80K in "emergency" savings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

This question can't really be answered by anyone other than you. How stable is the income? What are the alternatives to having a nanny? How much savings do you have? What types of savings? College Savings? Do you own a home? Are you planning to buy a home? What would you do in an emergency? What is the interest rate on the student loans? Could you pay the student loans plus all other expenses if you lost your job? What percentage of your take home is discretionary spending?

We used to have about that in HHI and we saved about the same as you, and I wish we had saved more. We are fine, but we have made decisions that ended up cutting income, and we had to go through some tighter (not tough, but tighter) times. In retrospect, I wish we had gotten rid of all the debt and save a bigger cushion (i.e., at least $250k in non-retirement) when we had the chance. Instead, we ended up realizing that we didn't have quite as good of an emergency fund as we wished after we had cut the income, thus squeezing much more to get to a comfortable place.

Super helpful, thanks. We have maybe 180K total in savings, but that includes retirement. We own two homes, one is rented out. Student loan interest rates are 0-2%. Stable incomes- we're both lawyers at midsized/large firms. Yes, some college savings (but not a lot). I totally agree with what you said about wishing we saved more- I think that all the time. I wish we did it before kids especially. Alternatives to nanny are daycare. Still expensive but less than nanny.

[Anonymous]

http://www.dcurbanmom.com/jforum/posts/list/222627.page

[Anonymous]

I think 20% sounds about right, or more if you can swing it. I'm a single mom and do ok. I save 15% for retirement and another 5% or so for college. When we're done with daycare/preschool payments, some of the savings will go toward college savings.

[Anonymous]

I don't understand posts like this. We get it - you're rich. Hire a financial planner to help you figure out what to do with your money. Or is it that you just really want to talk about your money but can't do it in real life?

[Anonymous]

Anonymous wrote:I don't understand posts like this. We get it - you're rich. Hire a financial planner to help you figure out what to do with your money. Or is it that you just really want to talk about your money but can't do it in real life?

$180k in savings is comfortable, but not too 'rich' to ask for advice here I wouldn't think.

[Anonymous]

Anonymous wrote:Working on a budget so DH and I can make some important decisions about childcare and what we can and cannot afford. We have high HHI (350Kish) but we also have a lot of debt (all student loan, low interest). What's a good rule of thumb (and something preferably not too complicated) for how much you should pay yourself first/save ideally a month?

I've heard 20% a month into savings is a good barometer and we're at that. Meaning, I've got a budget worked out where we pay down some student loan debt every month, plus have a nanny, plus put away about 24% of our take home income each month into savings (including retirement). Thoughts? Is this good? Bad? Basically trying to make sure we can afford a nanny without being financially irresponsible.

At that income, I would save more- at least 25% of gross. 15% of gross minimum for retirement, more if you want to retire before 70, plus college plus housing.... How much are you saving for your DC(s) college? Are you saving for a downpayment on a house, or have you already purchased a house? Do you have 9-12 months of expenses saved as cash for an emergency fund?

If it were DH and I and if the income split between your DH and you is close, I would bank all post tax income of one of your salaries. (That is what DH and I did.)

[Anonymous]

Anonymous wrote:I don't understand posts like this. We get it - you're rich. Hire a financial planner to help you figure out what to do with your money. Or is it that you just really want to talk about your money but can't do it in real life?

Its probably that they can't talk about it in real life. You cant go to your friends and say 'Dude, I make $350K. I save about $100K a year. You?"

This is a place to get a half-decent barometer on whats reasonable.

And to contribute: We make about $200K a year and save about $50K.

[Anonymous]

Anonymous wrote:Working on a budget so DH and I can make some important decisions about childcare and what we can and cannot afford. We have high HHI (350Kish) but we also have a lot of debt (all student loan, low interest). What's a good rule of thumb (and something preferably not too complicated) for how much you should pay yourself first/save ideally a month?

I've heard 20% a month into savings is a good barometer and we're at that. Meaning, I've got a budget worked out where we pay down some student loan debt every month, plus have a nanny, plus put away about 24% of our take home income each month into savings (including retirement). Thoughts? Is this good? Bad? Basically trying to make sure we can afford a nanny without being financially irresponsible.

We make slightly less (~325k) and we save about 35-40% of our gross (counting 401k matching), but we don't want to work until we're 65 either. 24% of take home seems good for now. Once the kids get older you can drop the nanny expense and funnel that to savings as well.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Working on a budget so DH and I can make some important decisions about childcare and what we can and cannot afford. We have high HHI (350Kish) but we also have a lot of debt (all student loan, low interest). What's a good rule of thumb (and something preferably not too complicated) for how much you should pay yourself first/save ideally a month?

I've heard 20% a month into savings is a good barometer and we're at that. Meaning, I've got a budget worked out where we pay down some student loan debt every month, plus have a nanny, plus put away about 24% of our take home income each month into savings (including retirement). Thoughts? Is this good? Bad? Basically trying to make sure we can afford a nanny without being financially irresponsible.

We make slightly less (~325k) and we save about 35-40% of our gross (counting 401k matching), but we don't want to work until we're 65 either. 24% of take home seems good for now. Once the kids get older you can drop the nanny expense and funnel that to savings as well.

I'm assuming you have a super high 401k match because after taxes there isn't that much left to live on.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Working on a budget so DH and I can make some important decisions about childcare and what we can and cannot afford. We have high HHI (350Kish) but we also have a lot of debt (all student loan, low interest). What's a good rule of thumb (and something preferably not too complicated) for how much you should pay yourself first/save ideally a month?

I've heard 20% a month into savings is a good barometer and we're at that. Meaning, I've got a budget worked out where we pay down some student loan debt every month, plus have a nanny, plus put away about 24% of our take home income each month into savings (including retirement). Thoughts? Is this good? Bad? Basically trying to make sure we can afford a nanny without being financially irresponsible.

We make slightly less (~325k) and we save about 35-40% of our gross (counting 401k matching), but we don't want to work until we're 65 either. 24% of take home seems good for now. Once the kids get older you can drop the nanny expense and funnel that to savings as well.

I'm assuming you have a super high 401k match because after taxes there isn't that much left to live on.

Lol.

Here's us: 280k income, save $100k a year with 401k match. It's called living below your means