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How Much Should I Save from my Paycheck?

How Much Should I Save from My Paycheck?

No matter how much you earn every month, there are some standard rules about how much you should save from your paycheck. Whether you're trying to build up an emergency fund or save for retirement, saving as much as you can is important. No need to wait; start saving today.

If you have a 401(k) through your employer, start saving by contributing as much as you can right away. If your employer matches your contribution, this could be key to building up your retirement fund. You'll never have to deal with investing or depositing that money because it will already be withheld from your paycheck. Age matters when it comes to saving for retirement though. If you're in your 20s, you should be saving about 10 percent of your yearly income for retirement. The percentage you should save increases the older you get. If you don't start saving for retirement until you're 30, then you need to save between 15 to 20 percent until you retire. Forty-somethings who are just starting to save for retirement need to put away between 25 to 30 percent.[1]

After you deposit your paycheck, think about your savings plans. For starters, set up an emergency fund. Most experts agree that you should have enough savings to keep you afloat without any income for three to six months. This includes rent, utilities, and basic necessities.[2] That might seem like an intimidating number, but you'll be glad for the cushion if you lose your job, or need to pay for unexpected car repairs or medical expenses.

Once you've started contributing to your 401(k), and have built up your emergency fund, there are a few more savings vehicles that could help you on the road to financial security:

Invest in a Money Market Account

A money market account is a lot like a savings account. They have a higher minimum balance requirement though and pay higher interest. Banks use the funds from your money market account to lend to other people. They charge the borrower slightly higher interest than they pay you for your account and keep the rest, which is one way a bank makes money. You can make withdrawals from your money market account several times a month; different banks will have varying limits on how often you can make a withdrawal. Be sure you're aware of all the details, like fees and requirements, before you open a money market account with your bank.[3]

Buy a Certificate of Deposit

A certificate of deposit (CD) is a deposit account with a bank or stock brokerage firm that “offers a higher rate of interest than a regular savings account."[4] It's a one-time investment that stays in the bank for a set amount of time, anywhere from six months to more than five years, and earns interest. When your CD is mature, you redeem it and collect the money you originally invested and the interest your money earned. You can choose from variable rate CDs and long-term CDs. You can also choose a CD with "special features"[4]  that will can be redeemed in case of your death. Talk with your banker to determine which kind will work best for you.

Choosing to save money from your paycheck can help you feel financially secure now  and in the future. It's important to have savings you can easily access in case of emergencies however, it's also important to have longer term savings that you can't spend until you absolutely need them. Regardless of how you save, getting started is the first step. Begin saving today and watch you money grow as the years pass.

About the Author:

Check 'n Go has been a leader in online payday loans and check cashing services for over 15 years, helping to build legitimacy to the consumer lending industry through their work with the Consumer Financial Services Association. By setting high standards for responsible and ethical lending, Check 'n Go assumes a leadership position in a rapidly expanding cash advance and payday loan business. Check 'n Go works tirelessly to provide consumers with auto title loans, check cashing, installment loans, and other financial needs.


[1] Perritano, John. "How Much Should I Save from Every Paycheck." HowStuffWorks. n. page. Web. <>.

[2] Vohwinkle, Jeremy. "Why You Need an Emergency Fund." Financial Planning. n. page. Web. 1 Feb. 2012.

[3] "How Do Money Market Accounts Work."HowStuffWorks. n. page. Web. 1 Feb. 2012. <>.

[4] "Certificates of Deposit: Tips for Savers." FDIC. n. page. Web. 1 Feb. 2012. <>.

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