![]() ![]() This is three to six months of expenses and will protect you against bigger emergencies, like job loss or your car going kaput. When the debt’s gone, you need to save up what we call a fully-funded emergency fund (Baby Step 3). If you’ve got debt (which we cover later) keep that emergency fund at $1,000 until you’re debt-free (which is Baby Step 2). (We call that a starter emergency fund, or Baby Step 1.) This puts a cash buffer between you and those life happens moments. Since budget percentages for these can vary, let’s talk through each one.Įmergencies: Set aside $1,000 in the bank right away. When it comes to the savings category of your budget, think about these three reasons to save: emergencies, big purchases and wealth building. How much you’re putting in savings each month depends on several factors! ![]() 1 But this is a great example of how a percentage or even an average shouldn’t set a standard for you. If you’re wondering what’s typical here, the average American saves around 9% of their income. This is the proven, guided path to save money, pay off debt, and build wealth. Heads up: You’re about to hear us mention the 7 Baby Steps. Giving is good for you and for others, and we recommend giving 10% of your income. Generosity shifts the focus off of us (our problems, our financial shortcomings) and reminds us of our blessings. Tithing to your church, donating to charities, supporting worthy causes-even if you’re in debt. Look up your own! Open your online bank account or get out those bank statements and see what your past spending reveals. maybe you should make a good money playlist to get you in the budgeting mood.)Īnd one more thing: If you’re reading this as you set up your first budget, don’t stop with the numbers we give you. Or maybe a category is like a playlist, and the lines are like songs. If those words are new to you, think of a budget category as a folder, and the budget lines as files inside it. ![]()
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