How much of your paycheck should you save, and why?

 

Photo by Micheile Henderson on Unsplash

“Save more money!” countless advertisements shout at you. “Put aside part of every paycheck!!” your parents scold. “Save as much as you can, or you’ll regret it later!” your financially savvy friends advise. 

Yeah, saving is important, but the above tips are remarkably unhelpful, aren’t they? You’re always left wondering, “How much of my paycheck should I save?” No one really seems to tell you the answer. 10%? 50%? What’s a good amount that will set you up for the future?

How much of your paycheck you put aside depends on your individual situation. There are no definite savings rules that will guarantee future financial stability, but let's go over a few guidelines that you’d be wise to follow.

How Much of Your Paycheck Should You Save?

So, the big question. When asking what percentage of your paycheck should you save, the general rule of thumb is that you should put aside 20% of each check. More is ideal, but anything is better than nothing if 20% isn’t possible for you. Try to stick to the 50/30/20 rule: 50% of your paycheck is for essential expenses, 30% is discretionary, and the remainder is for savings.

What Should You Save For?

Another big question is what kinds of things you should save for. “Savings” is pretty vague — the point is to have it in case you need to spend it, but what circumstances would require you to do so?

You should save for all sorts of expenses. Do you want to buy a new car but can’t afford one just yet? You’ll have to put a little bit aside every month until you can. However, it’s important not to drain everything you have, so you’ll need to save up enough that you’ll have a financial cushion left over.

A few other examples of expenses you should save for include:

●       Retirement;

●       Emergencies;

●       Education (for your children or yourself);

●       Vacations;

●       Transportation;

●       A home;

And other financial goals. Some of these expenses allow you to pay monthly, but you’ll need to have enough for a sizable downpayment. It may be in your best interest to have separate savings accounts, so you don’t overspend one or the other. You don’t want to be without your emergency savings because you opted for a more luxurious vacation.

What Kind of Savings Account Should You Use?

An important thing to remember is that not all savings accounts are the same. Most grow your money with interest, but some offer significantly higher rates than others.

For instance, your retirement savings should be in a traditional IRA (Individual Retirement Arrangement), a 401(k), or another kind of retirement account. Other plans exist, such as Roth IRAs and SEP plans (Simplified Employee Pension) that provide tax benefits or entail financial contributions from your employer. You want a retirement savings account that turns your regular contributions into a significantly larger sum that supports you when you stop working later in life.

Traditional savings accounts are what you are probably familiar with already. You can open these easily at any bank or credit union. The interest rates will be low, so don’t expect a small deposit to become much bigger in a few decades (maintenance fees may even cancel out any interest earnings), but they’re still safe places to store your money.

Money market accounts, however, offer higher interest rates, so you can earn more money just by depositing. They also allow you to write a limited number of checks per month and use an ATM card like a checking account. However, these kinds of accounts may charge monthly maintenance fees if you are below a certain balance, and they often require you to make substantial initial deposits.

Check out this link for other kinds of savings accounts.

How Long Will Saving Take?

How long it will take for you to reach specific savings goals depends on the size of your regular deposits (and, therefore, your income) and your annual interest rate. Depositing $200 a month into an account with an APY of .10% will get you to your goals much quicker than $50 a month with a rate of .05%. You can use this calculator to determine how long it will take you to save a certain amount of money based on your current balance and other factors.

Another complication is, well, remembering to save. An easy way is to set your online bank account to deposit part of your paycheck automatically. Another is to use financial apps that send you reminders. Earnin, for example, offers an opportunity called WeWin, where you could win major prizes simply for remembering to save a small amount of money every day.

Saving money can seem more complicated than it should be, and you’re not alone if you feel that way. If you don’t know how much of your paycheck you should save every month, start with whatever you can afford (preferably a minimum of 20%), and open your account as soon as possible if you haven’t already.

 

This article originally appeared on Earnin.

 

Please note, the material collected in this blog is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or Services.

 

8 expenses to factor into your home budget

 

Photo by Kelly Sikkema on Unsplash

Your home budget, also known as your household budget, is the money you set aside that will go toward essential living expenses. It’s critical to budget your finances to only spend what you can afford and reach your savings goals. 

You can guess what kind of things go into a home budget: rent or mortgage, groceries, savings, debt repayment, utilities, etc. However, people sometimes forget to factor the following expenses into their budgets, which catches them by surprise and forces them to reallocate their spending. Keep these costs in mind when figuring out how to budget your monthly paycheck and savings:

Transportation & Parking

You know you’ll need to pay for your vehicle each month if you own or lease one, but what about gas? Parking? If you don’t own a car, then how much does public transportation cost in your area?

According to Student Loan Hero, the United States' median household income was $61,937 in 2018. Households that earned this amount spend an average of $763 per month on transportation, including gasoline and car payments. Public transportation is cheaper, but again, it depends on where you live — you still might spend as much as $160 per month if you exclusively use Bay Area Rapid Transit in San Francisco.

Insurance Premiums

Insurance premiums are a significant hit on your wallet, but they’re necessary to have. Health and car insurance go without saying, but you may owe mortgage insurance if you put less than 20% down when purchasing your home. There’s also life insurance, personal insurance, contributions to social security, and more.

It’s difficult to calculate how much the average person in the U.S. spends on insurance because people’s situations vary tremendously. You might be lucky and only spend a few hundred dollars a month if you live in an inexpensive state and only need the basics. If you need more, then you could spend well over a thousand. Other factors affect your insurance premiums, too, such as your age, marital status, job, and education level, so combine all kinds of insurance you need to pay for when calculating your monthly household budget.

Out-of-Pocket Costs and Emergencies

Insurance doesn’t cover everything, though. Medical care is notoriously expensive in the U.S., so you should be prepared to pay out-of-pocket costs that exceed the scope of your health plan.

Disasters strike in other ways, too. Hopefully, it’s small — maybe you spilled coffee on your only nice shirt and need to buy a new one for work — but it might be an outright emergency, such as someone robs you or a natural disaster impacts your home. It’s crucial to have emergency money set aside to cover an irregular or unforeseen circumstance.

Pet Care

You budgeted to feed yourself, but what about your pet? These costs might be low if all you need to buy is food every month and a few toys that last you a year, but vet bills can be expensive if your animal friend has health issues. If you prefer to outsource much of your pet care, you should budget much more to account for sitters, boarding, and walks. Of course, pet care expenses depend on the kind of animal you have, so anticipate how much financial TLC your pet will need.

Subscriptions and Memberships

Subscriptions and membership fees on auto-renewal can sneak up on you. Don’t fall into the trap of thinking you’ve planned your budget for the month perfectly, only to be hit with a $15 Netflix bill you forgot to account for. These costs shouldn’t be out-of-sight, out-of-mind, so keep track of streaming services, subscription boxes, or shopping memberships you pay for.

Fees, Fees, and More Fees

Fees are everywhere. They’re like pests you can’t seem to get rid of, but you forget about them when they’re not in the room. Make a list of all the fees you might need to pay throughout the month, including:

●       Bank account maintenance fees;

●       ATM fees;

●       Overdraft fees;

●       HOA dues;

●       Credit card fees;

●       Late fees;

●       Monthly service fees.

 

And more. There are ways to avoid or reduce many of these, but don’t buy something you don’t need if a fee will hit you later and you’re living paycheck to paycheck.

Home & Vehicle Maintenance

It’s rare for everything to work as it should, especially if you can’t afford high-quality goods that last longer. Expect to pay for vehicle upkeep, appliances that stop functioning, and fixing potential damage. These costs are related to your emergency funds, but paying for regular maintenance will (hopefully) prevent actual emergencies from happening in the first place.

Different Kinds of Savings

Save as much as you can. Don’t forgo leisure entirely — it’s important to your mental health to have fun, and you deserve to — but besides general savings accounts, remember to save to buy a house, pay for college (or someone else’s education), emergencies, retirement, and more. Your monthly contribution to each may vary, but having substantial savings will set you up for major purchases later in life.

Budgeting is an essential skill. You can use a budget finance app if you need assistance, but remember to factor in every possible expense to avoid tight situations.

 

This article originally appeared on Earnin.

 

Please note, the material collected in this blog is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or Services.

Repaired scratch on touchscreen HVAC surface with Polywatch scratch remover cream

Having a touchscreen HVAC control panel in your car might look cool, but the touchscreen is vulnerable to accidental scratches too.

One day after a car wash, I found an obstructive scratch on my car's touchscreen HVAC control panel.

How to remove the scratch line and restore the touchscreen surface to be as smooth as before? I found the German-made Polywatch scratch remover cream to be a good solution.

The Polywatch cream looks like toothpaste, and comes in tiny 5 grams volume. But that amount of cream is enough for it to be applied multiple times.

I think it is named as Polywatch because it is originally formulated to polish and remove scratches on watch surface. In fact, it can be used to remove fine line scratches on smooth glass, acrylic and plastic surfaces. It works especially well with plastic surface.

It can magically eliminate tiny scratches and restore the surface to be as smooth as before. However, it might not work too well for deep scratches.

Polywatch works by slightly dissolving and grinding down the target surface to smooth the edges of the scratch and fill the gaps with the dissolved material, therefore restoring it to unscratch condition.

Using Polywatch is pretty easy. Just clean the target surface, make it dry and dust free, apply some Polywatch cream on the scratch, and polish it with a piece of microfibre cloth or cotton wool.

If you are facing similar problem of having obstructive scratches on glass, acrylic or plastic surfaces, you might give Polywatch a try.