How Much of Your Paycheck Should You Save? (With Data)

In this video we explore how much of your paycheck you should save every pay day, and what savings rates among different income levels are with data.

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Timestamps:
0:00 - Start Here
1:25 - Savings Rate Over Time
2:40 - Savings Rates by Income
3:58 - A Handy Tool
4:24 - How Much Should We Be Saving?
6:33 - Your Savings Goal
7:50 - How to Actually Save More
8:49 - What If I Have No Savings?
9:47 - A Caution
11:15 - How To Make More
12:15 - Savings By Age
12:52 - Net Worth By Age

PS: I am not a Financial Advisor, any investment commentary are my opinions only. Some of the links in this description are affiliate links that I do receive a commission for & they help support the channel

[humphrey]

The graph at 12:50 - we messed up the order of the dates, but the data is correct - the dates should go from left to right 1989 to 2019. Also... how much do you save? Lmk below.

[turntprophet]

Makes me feel good saving 20%.
A great tip is when you’re done paying off you car loan. That same amount you paid every month, just put into a savings from now on. You already built a habit of spending that money a monthly basis but move it to the bank now.

[chris-pjrk]

It's recommended to save at least 15% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of compound interest and potentially grow your retirement savings over time.

[TheWendyhan]

Single mom here with toddler. Saved and invested 80 percent for the past 4 years. But business is down now. Never have I ever been so proud of myself for being frugal during the highs and the lows is much easier now.

[azteca]

I was a company for about 10 yrs. The same year new management came in, I was diagnosed with cancer. Had surgery and treatment and went back to work after 3 months. The following year I was let go, as I was going back to check if the cancer was gone. Fortunately, I had saved 6 months of emergency funds. You just never know what life is going to throw at you

[demidvfedorov]

It’s not only spending habits. Higher incomes correlate strongly with being in high-cost areas such as NY or SF. The higher income is essentially negated by local price levels.

[anthonyrussell]

Only if a good amount of folks do what you say, just imagine how many millionaires we already have or will have in the future. Not the sad statistics where at least 50% of people are living paycheck to paycheck, even for high income earners. Great contents as always!

[CtimesProd]

I have been using the 50/30/20 rule for a few years now. I talk with friends who can’t believe I save 20% of my income or even know of this rule. Life style creep is real but this rule makes it so the more money I make I can spend more but also save more. No guilty feeling for spending $1k on eating out if I already know I have saved $1500. Also with this rule any stock by your company (ESPP, RSU), 401k, HSA gets added back into your monthly pay. This made me realize I make way more than I thought on paper.

[cpanther]

This is an awesome video! I’m just out of college making 55k with no student loans and no car payment. On top of job benefits, I currently put 20% of my paycheck into savings accounts, and about to increase to 30% to save more for a down payment. Been saving 20% of every paycheck since I started working at 16. I’m very fortunate to be in my situation and to have the parents that I do that instilled in me this mindset. This video has incredibly important information and more people need to see this sort of thing.

[shieh.]

My only correction is that the majority of savings wasn't stuff people can cut out when not in lockdown. Childcare, gas, school events, parking, etc. all eat into people's money and are often required expenses as a feature of getting to and from employment or having children in school. It wasn't only discretionary spending that had nowhere to go - it was day to day "nickle and diming" as a feature of employer expectations.

[dondrap]

150k and I save 55% every month. I've long since gotten over wasting money on things I don't need. It wasn't always like that. But eventually I started feeling happier about having a big savings than I did about instant gratification. I'm probably over saving and not invensting enough of it.

[jedc]

I did this out already because I was starting my dividend portfolio and wanted to see how long it would take to reach certain points.
I make about 24.4k after taxes and saving 10k a year (average of 833 a month), with the plan being a split between SCHD, JEPI, and USOI.
The crazy thing is, even saving that much it still takes about 7-8 years with DRIP to break the first 100k.

[SpencerJohnsonOfficial]

I'm fully focused on increasing my income right now. I am not someone that struggles with living paycheck to paycheck which is a blessing, but I have dreams of working for myself to exponentially increase my income. This has forced me to increase my savings rate to around 50% for the last few months which has given me the runway I need (and plenty more) to take a chance on myself and my business to see what I can really do with it while I'm young and have fairly limited responsibilities. It all starts with the basics though!! Excellent work on this one man.

[Courtney-Alice-Gargani]

Love this. It doesn't surprise me that this many people live beyond their means. People love to buy buy and don't plan for their future. Just because you're making good money now doesn't guarantee that you will make this when you retire. You can get laid off at anytime. My dad told me save as much as you can. I'm fugal because that's how he raised me. He told me when you buy a house save up that money for 18 months of mortgage just in case you lose your job and save for an emergency. Buy what you need and not what you want. When you buy a house, he said wait at least five years before you make upgrades like on your kitchen or bathroom. If they are in good condition, it's just for looks and save that money for house repairs because on a resale home you don't know when something needs to be repaired. I know this because I had to do house repairs on my home the first year of ownership.

[chuckmurray]

Well, this makes me feel pretty good. I save 36% of my gross pay (or 50% of my net pay). I control my expenses so that allows me to save more. I even make my own laundry detergent. :)

[aymaan]

Already gained so much knowledge from you man! We definitely need to spread awareness about saving and how important it is

[yosamuelee]

2 things:
1) It would be useful to clarify if savings rate mentioned is based on net or gross income (unless I missed it).
2) What is the criteria used to define living paycheck-to-paycheck? When it comes to the percentage of wealthier individuals that are supposedly living paycheck-to-paycheck, I would be curious to know if they are taking into account retirement/savings contributions. I could see some people that employ a zero-based budgeting strategy mistakenly claiming that they live paycheck-to-paycheck.

[raezvn]

I share your videos with my family and friends all the time. Thank you for always making these concepts feel doable!

[assessmentincharge]

I make around 650, 000 Indian Rupees (8, 000 USD approx) per annum, I live a frugal life and save around 45-50% per month. I am 37 years old but i plan to retire before 50. Even when i get pay raise i like to keep my lifestyle same.

[pranaliu]

Prioritizing savings is great but how much you need to save depends on how much you want to have in the future- if I am ok with living on the streets or in the h of nowhere, when people refuse to employ me anymore, I probably don't need to save anything. But most people don't want to end up there, so saving is more important than most people realize. Nice content!