How much should you save to get what you want in life?
The question might seem like a straightforward one to answer but it is not. We are going to try to keep it short as usual but there are two major things to consider.
The first thing that you need to keep in mind is that you should always have some savings for the rainy days. These rainy days can be anything from financial emergencies to medical emergencies. Despite the importance of savings being well-known, most people around the world are not ready for rainy days. This is not only true for people with low incomes (which is unfortunately logical) but also true for many people with moderate to high incomes. In order to be ready for the so-called rainy days you should have saved around three months of income. Once you are confident that you will be ok in case of rainy days you can move on to the next point.
Now there is a question that you need to answer with clarity. This question is what do you want? Are you saving to buy a new car? Are you saving to buy a new house? Are you saving for a wedding? Are you saving with a long-term perspective of being able to retire early? Each of these goals will require different types of saving attitudes. If you want to save to buy for a new car a couple of months of savings could be sufficient. If you want to buy a new house, you should be able to use a mortgage and you should keep in mind that buying a house is almost always a good idea for your finance as long as you keep your homes for the long term. Finally, if your goal is to retire sooner than others, this will require a long-term plan. There is a rule called the 50/30/20 rule. This rule states that a well thought financial strategy would be built as follow: 50% of your net income will be spent on essentials goods and services and 30% on non-essentials, with the remaining 20% going into your savings pot.
So in short, how much you should save depends on your personal circumstances but what applies to everyone is that you should always have savings for rainy days.