Kate Mason

It wasn’t until I was about six months pregnant with my first child that I decided I should probably dig in and start “adulting.” This meant several things for me and my husband, including, but not limited to, buying a house; getting out of debt; beginning to actively budget, set a savings goal and save; and meeting with a financial advisor.

The last one, securing a referral and eventually developing a relationship with a financial advisor, proved to be not only the easiest decision but the smartest move on our end. Because we were still relatively young, retirement, savings and a nest egg were not top of mind for us. But after the initial meeting with our FA, we realized those things, plus more, should take precedence over, you know, things like spending our money eating at the latest greatest new restaurant or spending copious amounts on skincare and video games.

The biggest question for us wasn’t necessarily about how to save for retirement; rather, it was this: “How much money should we save before we hit 30?” What we found was that the answer was not as straightforward as we wanted it be — but ultimately, that was OK. We got some direction and a few concrete goals. Being a self-proclaimed control freak, that worked just fine for me.

“How much money should I save?” seems to be a big question on a lot of millennials’ minds right now. And with more than half of Americans having less than $1,000 in their savings accounts, it's a question worth exploring. How much money should I save by the time I leave my roaring 20s and enter the calmer third decade?

While there may not be one rule of thumb, Rory Hartmann, C.F.P., a financial advisor with Northwestern Mutual, says this: “The problem in finance is that the answers always ‘depend.’ There are so many facets that factor into the big question of how much should be saved by a certain time. The general rule is to have three to six months of living expenses in an emergency fund at all times. This pretty much means you could live the lifestyle you are living now income free for up to six months.”

But there are other things to think about besides savings that help you out in the long run. “I think there need to be a few goals to consider in addition to saving up for your emergency fund,” Hartmann says. “I think by the time you are 30, you should really try to be debt-free, including paying off most, if not all, existing student loans, funding a 401K through your company and having them match your contributions and obtaining basic life and disability insurance. And I know it seems early but thinking of retirement and having a solid plan, even if it’s a simple Roth IRA, can do wonders for making you feel secure in the future.”

Intuit's Kimmie Greene suggests having at least your annual salary saved by the time you turn 30. That means at least $50,000 in your savings account if that's what you make in a year. But that's not a hard-and-fast rule.

Consider any big expenses you will incur in the short- and long-term. For instance, if you're planning on moving, you'll need to save enough to cover first and last month's rent, your security deposit, and moving expenses. Also take into account where you live, because the amount of money you need to cover your basic needs can vary signifcantly from city to city and state to state. 

It’s not a solid number, but it makes sense. At first, going into the meeting with our financial advisor with little to no knowledge about, well, anything, I really wanted those concrete goals of, “You should save this amount by two years and this amount by five years, etc.” I work best with clear cut numbers and step-by-step goals, especially when they surround my paycheck and costs. But after gaining a little more understanding of how the financial world works and how everything is so relative, I started to feel more comfortable with spreading things around. Meaning I have the set goal of saving enough for six months of income-free living but I am also investing in my future.

“A lot of people look at their finances like this,” explains Hartmann. “They follow the 60/40 rule. 60% of their income is going towards fixed expenses like rent or mortgage, monthly bills, food, gas, etc. The other 40% is split between savings and fun money. The goal is to get as close to 20% into long-term savings as you can. This sets you up for living a comfortable lifestyle within your income and saving for the future.” A similar idea is Elizabeth Warren's 50/30/20 rule: 50% goes to necessities, 30% to things you want, and 20% to savings.

This is a concept I wish I had known sooner. All during my 20s, my income fluctuated as I experimented with different industries and positions, new cities, new companies, new careers. At times I had a full-time job, senior positions and other times, I was a student again living off savings. I wish I had had more of a projected goal for the long-term. I remember making pretty decent money at a book publisher in my mid-20s and I had the foresight to set aside a certain amount every month for my savings.

For some reason, I had set a personal goal for myself to save $10,000 in two years. I am not sure how I landed on that amount or time frame but it was a goal and I stuck with it. Two years went by and I reached my goal exactly by the end of the second year. And I remember thinking, “Cool. Now what?” What I should have done was look into getting a few accounts opened, like an IRA, so that I could start focusing on the long-term. What I did instead was quit my full-time job and go back to school, living off those hard-earned savings until they were whittled away to nothing and I was back to square one starting a whole new career.

So it seems the theme is this: by the time you hit your 30s, it is smart to have a basic emergency fund of at least six months living expenses. That’s a given. So, depending on what you bring home in income, figure out what you would need to live just as you are now each month. Then develop a strict plan for building up that fund until you comfortably have enough saved. Once you get there, though, expand your financial horizons. Figure out a solid plan on how to get debt-free, how you can invest 20% of income into long-term savings and get on track with your retirement. It really is true what they say. It is never too early to start thinking about the future...and “adulting.”


Kate Mason is a certified life coach, specializing in the beautiful mess that is motherhood. You can check out her specialized coaching program, MOTHERLOADED, and get more information about Kate at KateMasonCoaching.com.