saving money for your family - adding in the "What-Ifs" (2024)

FAQs

What is the percentage of saving for the family? ›

This budgeting rule states that you should allocate 50 percent of your monthly income for essentials (such as housing, groceries and gas), 30 percent for wants and 20 percent for savings.

Long-Term Security

Saving money allows you to create a safety net for your future expenses as well as unplanned financial needs. The more you save, the more peace of mind you have, as you are better prepared for anything life throws at you.

Human beings need money to pay for all the things that make your life possible, such as shelter, food, healthcare bills, and a good education. You don't necessarily need to be Bill Gates or have a lot of money to pay for these things, but you will need some money until the day you die.

The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.

Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.

One of the most important reasons to have savings is for financial security. Financial experts recommend establishing an emergency fund, which should hold around three to six months of your expenses. Emergency funds are vital if you lose your job, have a medical emergency, or have another type of sudden emergency.

While California ranks third-most expensive for a single adult to live comfortably at $113,652, it only ranks fifth-most expensive for two working adults raising two children. The total family income should be at least $276,724 in the latter case.

We like the 50/30/20 budget as a place to start. It splits your income three ways: 50% toward needs, such as groceries, housing, basic utilities, transportation, insurance, child care and minimum loan payments. 30% toward wants, such as travel, gifts and meals out.

Decreased quality of life: Financial problems can lead to a decrease in the standard of living for a family, causing resentment and frustration. Difficulty managing finances: Money issues can also lead to disagreements over how to manage finances, leading to further conflict within the family.

You need both money AND family to get somewhere in life. Family is nice and all, but money is something you need to survive in the world. And money can't buy you the love that family and friends can give you. If you don't care about family—and are selfish, then money is far more important than anyone else.

Is money really important in life? ›

Beyond the basic needs, money helps us achieve our life's goals and supports — the things we care about most deeply — family, education, health care, charity, adventure and fun.

While you're working, we recommend you set aside at least $1,000 for emergencies to start and then build up to an amount that can cover three to six months of expenses. When you've retired, consider a cash reserve that might help cover one to two years of spending needs.

Give Non-Cash Assistance

If you're uncomfortable or unwilling to give your family member cash, consider giving non-cash financial assistance, such as gift cards or gift certificates. You'll have more control over what your money may be used for, and you can easily buy gift cards in varying amounts at most stores.

Key Takeaways:

The 60/30/10 budgeting method says you should put 60% of your monthly income toward your needs, 30% towards your wants and 10% towards your savings. It's trending as an alternative to the longer-standing 50/30/20 method. Experts warn that putting just 10% of your income into savings may not be enough.

Here's a final rule of thumb you can consider: at least 20% of your income should go towards savings. More is fine; less may mean saving longer.

In doing so, they miss out on the number one key to success in investing: TIME. The 70/30 Rule is simple: Live on 70% of your income, save 20%, and give 10% to your Church, or favorite charity. This has many benefits in addition to saving 20% of your income.

Break down your living expenses into categories and allocate 75% of your income to cover them. Then include line items for putting 15% of your money into investments and 10% into savings. You might want to try the envelope method or a zero-based budget to plan and track your spending.