Everybody knows that savings are important but a lot of people don’t have enough. More and more adults are struggling to maintain a good savings account and the number of people that have a healthy retirement fund is dropping rapidly. Part of the reason is that people don’t have the extra cash to save because they either don’t earn enough, or they’re spending too much. But people also end up falling short because they just don’t know how much they should be saving and even though they think they’re putting a good amount away, it’s not enough. This is a rough guide to how much you should have saved at each stage of your life and what you need the money for.

In your 20’s, you probably aren’t thinking about savings, but you really should be. Retirement and even buying a house might seem so far off but if you wait until you’re older, you’ll never put enough money away. During your 20’s, you should be aiming to put away around a quarter of your annual pay. It seems like a lot but if you’re sensible about living costs, it’s manageable. You’ll want to be using that money on a deposit for your own house, and a car if you haven’t already got one. These savings can be a combination of cash savings, retirement funds and debt repayments if you’ve got any. It’s most important to try to clear those debts as quickly as possible before you worry about putting away the cash for later life.

By the time you reach 30, you should have saved the equivalent of one year’s salary. If you’re earning $30,000 a year, you should have that in your savings account. Again, it seems incredibly steep but if you manage to put a quarter of your earnings away during your 20’s, you should be able to manage it, even if you’re spending quite a lot of it. At this point, you might want to think about making some investments as well as putting your savings into cash. It still seems far off but you need to start thinking about retirement and even cheap funerals for after you’re gone. Too many people are waiting until their 50’s before they start factoring these things into their savings plan which is far too late.

Beyond the age of 30, you should be aiming to save another year’s salary every five years. So at age 30, you’ll have a years salary. By age 35, you’ll have two years salary and so on. If everything goes to plan, you should have around 8 times your annual salary in the bank by the time you reach 65 and start thinking about retirement. When you’re thinking about those numbers, remember to adjust for salary increases. As you earn more, you can afford to put more away. By following this basic formula, your savings contributions are tied to your earnings so you can make sure that you aren’t just wasting the extra money that you’re earning.

Saving is never an exact science but this is a good guideline for how much you should be putting away.