How Much Money Should I Have Saved By 21?

When it comes to money, 21 is the magical age that many people look back on as the beginning of their adulthood and the prime of their twenties. For many people, this is also when they begin making changes in their finances and saving more money for retirement.

People spend a lot of their time worrying about whether they have enough money saved for retirement and how much they should be saving, but what is often forgotten is that people have a lot of control over the decisions they make with their money. When it comes to retirement, many people think that they won’t be able to save enough money until they’re older, but in reality, you can take action right now to start saving for your future.

So, how much money should you have saved by 21? Let’s dive deep into what financial experts have to say.

Why you shouldn’t panic

Many people think that they should have saved up a large sum of money by the time they are 21, but it is important for people to realize that some of the most important lessons about money can be learned in college.

Graduating from college and going on to graduate school can be a big financial burden. Many graduates cannot afford the student loans they will have to take out.

It can be very easy to get scared that you won’t be able to afford the costs of college and graduate school, but this is the reason why it is important for people to start saving money in college.

It’s all about setting goals and not panicking too early on when they don’t pan out. If a person doesn’t think they will have enough money saved by 21, it can easily lead them to panic and make poor decisions.

So, to give you a quick answer, there’s no magic number when it comes to figuring out how much money you should have saved by the time you turn 21 years old. Instead, you should focus on preparing for your future as early as you can and begin saving as soon as you start thinking about it.

Consider following the 50-30-20 budget rule. Simply put, this rule means that you should spend 50% of your income on necessities like food, shelter and clothing and 30% on either paying off debt or putting money aside into savings. The last 20% should go toward fun things, like going out to eat or shopping. Using this rule will help you develop good money habits for your future.

Short-term goals

When it comes to saving up for short-term goals like buying a car, there’s no set amount of money that people should have saved by 21. Instead, you should consider what your goal is, how much money you can afford to put towards this goal, and then begin saving.

For example, if you want to save up for a car that costs $5,000, you could break this down into monthly payments to make it seem more attainable. Instead of just saving up a lump sum at once, you’ll be in great shape if you can save just $200-$250 a month, which is the average monthly payment on a car.

Here are a few tips you should keep in mind:

  • Start building an emergency fund
  • Try cutting down on unnecessary costs
  • Pay off your credit card debts

Mid-term goals

While short-term goals tend to be smaller, with shorter time horizons, mid-term goals can mean a lot more. This can include saving up for a home—which is much more expensive than buying a car. Nevertheless, it’s just as important. These are things you may not need immediately (since you can still get by in your college dorm or by renting an apartment in the meantime), but that you’ll need for security further down the road. 

While you might not be able to save the amount of a down payment for a house all at once, you can start small by setting goals for yourself. Consider your time horizon—when you want to buy a home—and work backward from there. Once you have a rough idea, you can calculate how much you’ll need to set aside each month to make it possible.

At this stage, here are a few things you should consider:

  • Set up a separate savings account
  • Begin shopping around for insurance

Long-term goals

Your retirement will come sooner than you think. It’s important to start saving for it as soon as you can. The longer you put off saving for retirement, the less likely it is that you will be able to comfortably retire.

Having enough saved up for retirement is a pretty big goal, but if you start early enough, you will have many years to make up the difference. For now, though, you probably want to start small. Experts recommend setting aside at least 15% of your income for retirement. You can start saving for retirement by contributing 15% (or more) of your income towards an employer 401(k) or an IRA if your employer doesn’t offer a retirement account.

The takeaway

It may seem intimidating to think about the amount of money you should have saved up by 21 and how to go about saving it (like a job or financial aid), but you don’t have to do it alone. Talk to your parents and ask them for savings tips that might help you out as well.

Many people get caught up in thinking about how much money they should have saved by 21, but it is important to remember that there’s no set amount you should have saved—especially if you haven’t even graduated from college yet. Start saving and planning for your future as early as possible. The best rule of thumb when it comes to saving money is to start early, even if just a little, and work your way up from there!

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