How much money to save?
As previously disclosed, we max out our annual tax-free contributions and have set a goal of $250,000 in liquid assets (that would include about $50,000 in cash as emergency fund). In other words, were something to happen to either one of us or if the world changes dramatically, we wouldn’t have to worry about anything for a while.
Savings goal
When we set an arbitrary goal of saving a quarter million bucks, it was just a small step to eventually become a millionaire, but there is really no logic behind this number for us. That is when we decided to investigate, how much money should a family or couple save? We conducted an extensive search on Google and there is all kinds of information but obviously none is customized for anyone (that is when you need the services of a personal finance adviser). Since we are more research-oriented people, we dug deeper and deeper.
What we concluded that many writers keep suggesting 10% (some even talk about 20%) of your take-home pay as savings. Of course, if you are contributing to retirement plans or have high-interest debt then this percentage will change.
So we set down and totaled all our expenses for last 12 months and found out that on top of our retirement plan contributions, we can easily save 20%. What we are going to do now is to save at least 20% and have the rest of the money left over for spending on pleasure (it is not that we plan to waste, we will still be careful, we are just not going to save everything that we can).
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