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Saving for the future is vital for your financial well-being. Whether you’re preparing to make a large purchase, contributing towards retirement, or simply establishing an emergency fund, saving money should be a top priority for every working adult. A common benchmark for financial stability is what your savings look like at age 30. Many seem to think that 30 is the definitive age at which your life should be figured out, and therefore one of the first times individuals truly take stock of their financial situation. One question we’re asked regularly is “how much money should I have saved by 30”? There is no one right amount, but there are solid recommendations on what your financial management plan should look like by the time you reach 30.

Think about savings in terms of ratios, not amounts.

There’s no magic number you should have saved, but rather a percentage of your income. The goal is to increase your savings as your income rises throughout the years, and make sure your rate of spending slows. If you haven’t started any type of savings plan yet, a good place to start is putting 10% of each paycheck away. Then each month you can increase that amount by 1% until you’re on track to reach your savings goals.

The end game is different according to different experts. Financial Samurai recommends having at least one year of living expenses saved by 31, while Fidelity says that having a full year’s salary saved by 35 should be the goal. Regardless of what benchmark you aspire to reach, the goal should be increase your savings each year to account for higher living expenses and preparation for the future.

Don’t just save more, save smart.

If you’re putting away 20% of your income into your standard savings account, or stashing it in cash around your house, you’re not getting the most bang for your buck. If you have the money to put away, your first priority should be saving for retirement through a 401k or IRA.  These types of accounts often allow a much higher return on your savings and added tax benefits. Plus, some employers will even match a certain percentage amount of your 401k contributions. If you’re not at least contributing the maximum amount they’ll match, you’re losing out on free money.

Besides retirement savings accounts, there are a wide variety of other investment options that you might look into besides a standard bank account. Here are three basic examples of investment types:

• Bonds
• Stocks
• Mutual Funds

Investing your savings may seem overwhelming, but there are plenty of online resources and financial wealth advisors that can help you understand what investment options may be best for your situation.

Protect your assets.

Savings doesn’t have to be limited to your cash income. If you’ve made any large purchases, such as a house, a car, or any other valuables, make sure you’re protecting those assets. Take inventory of any items in your life that would cause a financial setback if they were damaged or stolen. What type of insurance do you have for those items? It may not seem necessary at the moment, but it’s much easier to mitigate the financial loss if you’ve prepared for it in advance.

Focus on debt that cancels out your savings.

While it’s important to be proactive about how much of your income you’re dedicated towards savings, sometimes the focus should be on your current debt. One example of debt that can cancel out the percentage of returns you’d be getting on your long-term savings is high-interest credit card debt. If you have a credit card with a 15% interest rate, you’ll be losing more money by carrying a balance on that card than you could save in a 401k. If you’re ready to put a higher ratio of your income into various savings accounts, make sure there isn’t any high-interest debt in your life that money should go towards first. Learn the best strategies for paying off debt like student loans and credit cards by visiting our post on how you should pay off your credit card debt and/or what strategies can pay off your student loans quicker than your original repayment terms.

Use a variety of savings techniques to reach your goals.

Whether you’ve reached 30 and are starting to think about your finances for the first time, or you’re in your 20s and trying to be financially prepared, the above savings advice is a great place to start. Remember that there is no magic dollar amount you should have saved by 30, but rather a collection of savings techniques you should be using to prepare you for whatever life may throw your way.

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