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Are you looking to level-up your savings strategy? Read on for savvy tips from one of our experts.

Lady enjoying a cup of coffee

Key Takeaways:

  • When building an emergency fund, consider saving three to six months of income to help cover bills and unexpected costs.
  • Try saving for retirement as early as possible, and take full advantage of 401(k) matching if it’s offered by your employer.
  • To save for fun, try the 50/30/20 rule as a loose guide—50% of your income is for essentials, 30% for fun, and 20% for savings, adjusting as needed for your personal budget.

When it comes to saving, there is no one-size-fits-all solution—it’s a flexible balancing act that looks different for everyone and can change over time.

But never fear, our Huntington expert, Belinda Sherman, CFP®, Director of Advice and Financial Planning, provides general guidelines that can help you re-evaluate and reaffirm your own savings strategies.

How much should I have saved for an emergency fund?

Reflecting on past emergencies and understanding your evolving needs can be helpful in evaluating your emergency fund requirements. What unexpected expenses have come up over the last year? How much did they cost? Did you have enough money saved to handle the expenses and keep up with your daily life? 

When building an emergency fund, saving up three to six months of your expenses is a commonly shared guideline. Belinda recommends taking this practice a step further by instead saving three to six months of your income, as early on as you can. “Our expenses vary as we age. Later in life, we will likely need more in an emergency fund than we did when we were younger. Before retirement, if you’re employed, you likely have reliable income each month, making it easier to replace your emergency fund over time. Post-retirement, the income is coming from other sources—usually social security, your own retirement fund or investment account, which makes it more difficult to replenish.” By using your monthly income as a benchmark for your emergency fund, rather than your essential expenses, and by saving as early as you can, you can help bolster your emergency fund to protect yourself now and in the future.

How much should I save for retirement?

Saving for retirement looks different for everyone—like an emergency fund, the amount needed depends on your age, expenses, and lifestyle. If you’re looking for an optimal target, Belinda says to aim for saving 15% of your yearly income toward retirement.

That being said, saving 15% of your income is not a requirement in order to successfully retire. It isn’t always feasible, and that’s okay. According to Belinda, the key to impactful retirement savings is to start saving as early as you can, even if it’s just a little. “It is better to start earlier, but the truth is, it is never too late to start saving for retirement. Even if you start saving at age 45, you have 20 years’ worth of savings and compounding until retirement. You may need to save a larger amount or adjust expectations, which can be evaluated through a financial plan.”

Another crucial factor in retirement savings is 401(k) matching. “If your employer provides a matching contribution, try not to leave any of their match on the table,” Belinda stresses. That means if your employer will match up to 4% of your contribution each paycheck, try to prioritize contributing at least 4% to take full advantage of that employer benefit. The 4% contribution from your pay and the 4% match from your employer add up to 8% in your 401(k)—it’s free money on behalf of your employer you wouldn’t have received otherwise.

How much should I save for fun?

Remember the 50/30/20 rule to allocate expenses? 50% of your income is used for required expenses, 30% of your income is for nonessential items, or the “fun” money, and the last 20% of your income is for your savings goals. Belinda explains, “The critical piece of the 50/30/20 framework is maintaining balance. We often see individuals overextend on the basic expenses. If your monthly expenses are 60% of your income, that might cause you to miss out on fun today or skip on saving for the future.” If you can, try to maintain discipline on a regular basis in each area so you can feel good about what you’re saving and where you’re allowing yourself to indulge.

To set yourself up for the “fun,” it’s also important to make sure you have enough set aside for emergencies. Belinda says that intentionally focusing on creating an emergency fund and prioritizing savings allows you to create the capacity in your budget to spend on experiences and items you desire now. By creating that cushion, you can cover your essential, predictable expenses as well as the unexpected expenses, helping you feel better about spending in the present.

Money is a tool. Saving for the future and saving to create memories are both important and necessary. The trick is creating the structure and discipline that makes room for both. We hope you feel empowered to tackle your savings goals head-on, and have some fun along the way.

Use different savings accounts for different goals.

Balancing your savings goals with spending in the present can be difficult. It’s a feeling Belinda can relate to as well. “I am a saver. I saved a little bit over a long period of time, and it really made a difference for me, but I got addicted to routinely saving, sometimes forgetting about the ‘now.’ As I get older, living in the present is more important to me.” To help maximize your savings, consider using different savings accounts for your different goals:

  • Personal Savings Accounts†: For short-term savings goals, a traditional savings account tied to your checking likely makes the most sense—grow your funds through interest and conveniently access your funds when you need them.
  • Certificates of Deposit (CDs): CDs, which are FDIC-insured† and typically earn higher interest rates compared to traditional savings accounts, are ideal for long-term goals like weddings or home down payments. Keep in mind, there’s usually a penalty for withdrawing from a CD before it reaches maturity.
  • Money Market Accounts (MMAs): MMAs are also FDIC-insured† and typically earn more interest than a traditional savings account. But unlike CDs, they are usually accessible through online transfers, ATM withdrawals, or check-writing privileges, making them great options for vacation savings and other short-term goals.
  • Retirement Savings Accounts: 401(k)s are employer-sponsored retirement plans. If your employer offers a 401(k) plan, try contributing to it as soon as possible to help grow your retirement fund. If not, consider an Individual Retirement Account (IRA) to help you save for retirement and receive tax advantages that can help grow your savings over time.

† Deposit accounts at insured banks are covered up to the depositor's applicable limits established by the FDIC.

The information provided in this document is intended solely for general informational purposes and is provided with the understanding that neither Huntington, its affiliates nor any other party is engaging in rendering financial, legal, technical or other professional advice or services, or endorsing any third-party product or service. Any use of this information should be done only in consultation with a qualified and licensed professional who can take into account all relevant factors and desired outcomes in the context of the facts surrounding your particular circumstances. The information in this document was developed with reasonable care and attention. However, it is possible that some of the information is incomplete, incorrect, or inapplicable to particular circumstances or conditions. NEITHER HUNTINGTON NOR ITS AFFILIATES SHALL HAVE LIABILITY FOR ANY DAMAGES, LOSSES, COSTS OR EXPENSES (DIRECT, CONSEQUENTIAL, SPECIAL, INDIRECT OR OTHERWISE) RESULTING FROM USING, RELYING ON OR ACTING UPON INFORMATION IN THIS DOCUMENT EVEN IF HUNTINGTON AND/OR ITS AFFILIATES HAVE BEEN ADVISED OF OR FORESEEN THE POSSIBILITY OF SUCH DAMAGES, LOSSES, COSTS OR EXPENSES.