Hello. I’ve been feeling uncertain about my savings habits, especially when I compare them to popular budgeting plans like the 50-30-20 rule. I earn $47,000 a year, and I save about $300 a month, but I’m concerned that it might not be enough.
Here’s a bit more about my situation:
- 401k Contributions: I contribute enough to get the full company match, which is 8%. Over the past three years, I’ve accumulated about $25,000 in my 401k.
- Savings: My bank account currently holds around $3,500.
- Monthly Savings: I save $300 a month outside of my 401k contributions.
I often see advice suggesting that 20% of your income should go towards savings, but it’s unclear if my 401k contributions count towards that 20%. If they don’t, I worry that I’m not saving enough. Despite contributing to my 401k, I still feel like I’m falling short, especially since I’m only saving $300 a month in my bank account, while some plans suggest I should be saving closer to $700 a month.
I understand that cashing out a 401k comes with penalties, and I don’t plan to do that. But knowing that I have $25,000 in there, fully vested, provides some reassurance. Still, I can’t shake the feeling that I’m not doing enough at 26 years old.
Is saving $300 a month reasonable given my salary, or should I be aiming higher? I also wonder if relying on my 401k as a safety net is a good strategy or if I should rethink my approach to savings. Any advice would be appreciated.