This is a very broad topic to discuss but I think about it a lot. From my experience, the amount changes over time and also the potential percentage. I think the generic recommendation is to save 10% or 20% which is a good guide, but it may not realistic if you are a student or perhaps have already retired.

From my perspective, I like to exercise some frugality, or in another words as the old saying goes, “Live below your means”. This is not a self limiting thought process where you start getting into the mindset of saving money instead of making money. I give both of these focus, with a MAJOR focus on the making and a MINOR focus on the saving. To elaborate further, spending the majority of available time and money reinvesting into making more money, whether that be starting a business, investing, studying and improving skills and spending the minority of available time into finding ways into cutting costs. At the end of the day, not immediately always but over time, in most cases it will be easier to earn another $2,000 than save an additional $2,000.

The cost of living generally goes up every year, so I always plan to earn more and save more every year to stay ahead of the game. If the cost of living goes up 3% each year, then I make sure I plan to increase annual savings by at least 3% each to stay on track.

I also think that by suggesting immediately “I am going to save 10% and put it on an automatic transfer”, that is self limiting. I have often come across the recommendation that if you feel you are not earning enough, it may be better to reinvest some of that money into yourself to earn more.

I listened to a video from Dan Lok recently on YouTube and he made a suggestion that you should reinvest all money that you save into yourself until you have an income of $250,000. I found that concept very interesting and hadn’t considered that before. I am not sure whether the $250,000 would be relevant for everyone but I like the suggestion. Brian Tracy suggests to re-invest 3% of your income into increasing your income every year which is another alternative amongst many. Perhaps you find yourself in a profession where it is not possible to exceed beyond a certain income, then reinvesting your savings in yourself to earn additional income would not be possible.

Ending here, my thought on the topic of ‘How much money should I save’ is indirect. We all should save as much as we can which is dictated by how much we can earn, rather than focusing on a savings percentage. Focus on earning more each year percentage from a combination of a job, investments, businesses is the way to go. In 2018, it has got to be at least an income increase of 10% from all available sources every year to surpass the cost of living. Indirectly, what can be saved will keep up year after year and be increasing which is optimal. We can’t keep saving 10% of income if our income is flat, year on year. This is a real challenge over time if business hand out income increases of 1-2% per year

Please leave your comments below if you found any of this useful or other methods that work for you.