How Much Money Should You Be Saving In Your Twenties?

Hope you guys enjoy today’s guest post from my friend Dayton! Let us know what you think!

We all know we should take advantage of every moment (life is short, right?), but we also need to prepare for the future.  These opposing philosophies pull at us as we move from our teens to our twenties and beyond, where we have less forevers to prepare for.  It’s a bleak thought, but according to financial experts, it’ll all work out as long as we put aside some money every month.

Except, how much money should you be saving in your twenties?  Altogether, when you account for all the things that we’re supposed to save for, how much of our paychecks is that?  And is that even possible for millennials today?

Where does it all go?

Alright, so here’s a very basic breakdown.  Of course, we all make different amounts of money, and we’ll all need different amounts in the future, so keep in mind this is all relative.


It seems so far away right now (will we ever stop working?), but you’re supposed to save as much as possible.  The general guideline is 10-15 percent of your income, just stashed away for retirement -money you don’t touch until you stop working.  Fortunately, many employers help out with retirement funds, so if you have a 401k program at work, please enroll!

Emergency Fund

You’re also supposed to save a certain amount of money every month just in case something goes wrong.  You get laid off….your car breaks down….you have to go to an emergency dentist visit. Sooner or later you might need a nice little emergency fund to tap into, so most people recommend stashing away an amount equal to three months’ salary.  It might seem like a lot, but considering that even if you have health insurance you can still be on the hook for thousands of dollars after a hospital visit, that might still not be enough.

The truth is that there’s no way to plan for every emergency, but having some sort of fund can help mitigate the damage.  


Wait, you’re supposed to budget for fun? Absolutely!  The truth of the matter is that all of us need some downtime every once in awhile, but that shouldn’t ruin your monthly budget.  

Unfortunately, this is the most flexible part of your savings budget.  Ideally, you are able to dip into this sparingly, but more likely this is whatever you have left at the end of month.

Is it possible?

The average millennial is making about $35,000 a year, or just over $2,900 a month.  This obviously depends on where you live and the standard of living, but going with the averages will help us understand the problem.

Your ideal budget then would look something like this:

  • Putting away $437 dollars a month for retirement
  • Having  $8,750 for emergencies, which would mean saving $364 a month for two years
  • Rent is ideally no more than 30 percent of your income, which would be about $875 a month here.  Some will spend a lot more, some will spend a lot less, but let’s just assume that you’re the middle-of-the-road millennial
  • Groceries are approximately 10 percent of your income, so $290 here
  • Student loan payments are another $200
  • Monthly utilities average out to $150
  • Health insurance is about $300

All this adds up to $2,616 a month, which gives you $284 for transportation and fun.  Both of these are especially hard to “average out”, because transportation costs will depend a lot on things like whether or not you have your own car, what your commute time is, and how efficient the fuel is that you’re using.  

Fun is also hard to estimate, because everyone has different tastes.  Some people only need a few audiobooks to keep them occupied, while others prefer high bar tabs and expensive concert tickets.  

Can you make this budget work?  Absolutely, but it might require some sacrifices on your part.  Additionally, this is only the average.  Some people don’t have student loan debt, others have crippling medical debt.  This imaginary budget just goes to show you that those finance experts aren’t completely off their rocker when they recommend saving this much for your retirement or emergencies.  Most of us can make it work with a little effort and a lot of sacrifice.

You just have to ask yourself if it’s worth it to you.

About the author:

Dayton lives in Idaho, where she spends too much time playing devil’s advocate, much to the irritation to her few friends and family.  Intending to put this passion to use, she writes for many online publications to keep her sanity.

Need a little career advice? Order my book on Amazon!

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Corporate Survival Guide For Your Twenties


  1. dixya @food, pleasure, and health

    November 27, 2017 at 9:25 pm

    i wish i had this guide during my you have something similar for someone in 30s??

  2. Katie

    November 28, 2017 at 10:31 am

    I can’t say that I have much room for “fun” money in my budget but I am working to get there!

  3. Jessica

    December 12, 2017 at 12:54 am

    Love this guide, it is the same sort of thing I recommend to my readers and follow myself! Saving is so important and who knows that better than those millennials that were struggling to find jobs during the recession. I really love how you threw in a model budget too, super helpful.

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