Dave Ramsey: Here’s How Much Money You Should Have In Savings

However, 36% of all Americans said they kept $100 or less in this account.

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You can begin this week.

How Much Savings Should You Have?

Ramsey suggests there is no one-size-fits-all dollar amount that should be in someone's savings account. Instead, the right savings amount will depend on your individual savings goals.

While others may be putting money aside for saving up to buy a car.

According to the post on Ramsey Solutions, a savings goal isn't the same as an emergency fund or sinking fund. An emergency fund is for covering unexpected expenses resulting from real emergencies, such as your roof collapsing or losing your job. On the other hand, savings set aside for a sinking fund are to cover expenses that are approaching soon, like buying a new mattress.

How Much Should You Save in Your Emergency Fund?

Ramsey Solutions advises adjusting the recommended savings amount to $500 if you earn less than $20,000 per year.

Once you've established a starter emergency fund, he advises paying off all debt, except your mortgage, in its entirety. Next, move on to Step 3, which is to create another emergency fund that covers three to six months of essential living expenses. To do this, add up the total amount of necessary expenses you have each month, including housing costs, food, bills, and transportation costs.

When you get the final amount for one month, multiply that by three (or six) to figure out how much you'll need for your emergency fund.

How Much Money Should You Save in Your Emergency Fund?

The amount of money set aside in sinking funds, as per the post from The Ramsey Solutions, is essentially the amount of money saved and allocated towards covering a future known expense.

Let's use an example where you know you'll be buying a new mattress in the near future. You want to spend $900, so over the next three months, you'll set aside $300 per month in a savings fund to reach your goal.

How Much Should You Have in Your Retirement Savings?

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According to the Ramsey Solutions post, it's suggested that you save 15% of your household income for retirement. The article gives an example of a household that earns $80,000 per year and would need to set aside $12,000 annually for retirement savings.

The good news is that there is no maximum amount when it comes to saving money in your retirement account. If you have a retirement account, like a company 401(k) with a matching program, Ramsey suggests making the most of it and investing excess funds into Roth IRAs.

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Dave Ramsay: Here's How Much Money You Should Have in Savings