A piggy bank sits near several road signs for savings goals

How much money should I save?

Apr 5, 2022
Empower Insights

Prepare for some of life’s biggest milestones and moments

Balancing your financial priorities and managing your money may feel like a juggling act at times. It can take a tremendous amount of focus, effort and discipline to find a steady and stable rhythm.

But with a little bit of planning, and knowing how much you may need in the bank to prepare for some of life’s biggest moments and milestones, you can control your spending while saving for your future.

Read on to learn suggested savings targets to help you achieve your goals.

How much money should I save before moving out?

Whether you’ve just graduated from school, or you’re ready to graduate from mom and dad’s house, a general rule of thumb when getting your own place is your income should be about three times your overall rent.1

For example, if you fall in love with an apartment that costs $1,500 per month, you may need to bring in roughly $4,500 per month to get by. Remember, you may also be responsible for other regular bills, like WiFi, electricity, gas and parking, that can pile up fast and eat away at your wallet.

It’s also a good idea to make sure your emergency fund is in good shape before “leaving the nest.”

Image text: Housing shouldn't cost more than 1/3 of your income

How much money should I have saved in an emergency fund?

Sooner or later, something won’t go as planned. You may lose your job or wake up to your furnace pumping cold air.

To be safe, you should consider having enough on hand to pay for three to six months’ worth of your normal expenses, like your mortgage, utilities and groceries, to endure any unforeseen obstacles you may face. If you can set aside even more, go for it. Using a lump-sum payment such as a tax return is a simple way to not only pad your cushion but also gain some much-needed peace of mind.

Need help? Once you have a good idea of your monthly expenses, use this emergency savings calculator to determine how much is suggested for your emergency fund.

Image text: Cash for six months worth of expenses is ideal for an emergency fund

How much money should I save before buying a house?

Home sweet home isn’t always so sweet on your budget. While it varies by state, the average price for a house in the U.S hovers in the neighborhood of $325,000. If you can, aim to have 20% saved up for a down payment, which would be $65,000 on a $325,000 property, to avoid owing private mortgage insurance (PMI) every month. Too lofty? Don’t worry. Depending on the type of loan you receive, you may be eligible to put down just 3% with a conventional loan or 3.5% with an FHA loan.2,3

You’ll also want to account for several overlooked home-buying fees that may be due at closing, which can total a few thousand dollars.

Image text: A down payment for a home is typically 20% of the purchase price

How much money should I save to have a baby?

If you want to start a family, you may want to start pinching pennies. According to the USDA, the average cost of a raising a child is approximately $13,000 per year, and even higher for a newborn. That’s because common goods like diapers, clothes and toys, not to mention other essential items like a crib, can mount up quickly during a baby’s first year especially if it’s your first kiddo.4,5

In fact, giving birth alone can cost over $4,500 — out of pocket — when factoring in pregnancy, labor and delivery.

Image text: The average cost of raising a child is about $13,000 per year

How much money should I save for my kids’ college?

College may seem far away if you’re still dropping your toddler off at daycare every morning, but they’ll be pursuing their degree before you know it.

Some experts recommend saving to cover about one-third of any potential college costs in a 529 plan with the rest coming down the road from a combination of student loans, financial aid and your income. Per SavingForColllege.com, that equates to saving $250 a month for an in-state college, $450 a month for an out-of-state public university and $550 a month for a private institution.6,7

Image text: Saving $250 to $550 per month for college is a good goal

How much money should I save for a family vacation?

For a family of four these days, seeing the world may come with an out-of-this world price tag. Depending on where you go, and how you get there, you could end up spending nearly $6,000 for a weeklong trip when you add in transportation, lodging, entertainment and food.8  Building a travel fund can help you stay on track with your financial itinerary as you map out your next summer getaway.

Image text: For a family of four, you may want to save $3,000 to $6,000 for a weeklong vacation

How much money should I have saved for retirement?

Empower research shows socking away 10% of your salary may keep you on pace to replace at least 100% of your working income after your career is over9, which would you give another big reason to celebrate. However, if you can’t afford to contribute that much right now, that’s OK. Everyone’s situation is different. You can access Empower’s retirement calculator to get a better idea of where you stand and what you can do to make progress toward achieving a stronger outcome.

Image text: Aim to put away 10% of your salary for retirement

1 Capital One, “How Much You Should Save Before You Move Out,” December 2018.

2 USA Today, “How much money should you have to buy your first home?,” May 2021.

3 CNBC, “How to figure out if you actually have enough money to buy your first home,” October 2021.

4 USDA, “The Cost of Raising a Child,” February 2020.

5 Parents.com, “What to Expect: Hospital Birth Costs,” May 2021.

6 CNBC, “INVEST IN YOU: READY. SET. GROW. If you don’t have a 529 savings plan, you’re not alone. Here’s what you need to know,” March 2020.

7 CNBC, “How much should you be saving for your child’s college education?,” October 2021.

8 Bankrate.com, "The average cost of a vacation: Transportation, food, entertainment and more," November 2021.

9 Empower, “Scoring the progress of retirement savers,” October 2022.

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