# Am I saving enough for my age?



## HappyJanuary (Jan 27, 2011)

Starting next September I will be 23, and that month I am also starting my new job, and also moving out from my parents' house.

I have a budget set out, but I'm not sure if I'm saving enough money...

My income, after tax, less rent, food, small expenses, transpo costs, etc., allows for savings of about $1,000 per month, or $12,000 per year.

Even though I have no debts to pay off, I don't feel comfortable saving only $12,000 per year, but due to the location I really want to live in, I don't see how I could save any more. Looking for either reassurance or a kick in the ***, whichever is most appropriate.



Am I wrong? Is that a good amount?


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## Square Root (Jan 30, 2010)

Are you kidding? 23 years old and saving $1,000/month. You are on your way buddy. Keep up the good work.


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## PF_Enthusiast (Jan 21, 2011)

This is a very broad question and I'm sure each and every response will be different. My advice is to plan a budget and follow it, as everybody should do regardless of their income. Live within your means. Once you write your budget out, see where you can pinch pennies and save a few bucks. At 23, I can say you're able to save a lot more than I could at that age. 

A few questions I have would be, is your goal to save for retirement or for something such as a house, new car, etc.? At 23, you have quite a time horizon before retirement. Are you saving in hopes of building some passive income? I would also suggest you read the Wealthy Barber. It's a great read for somebody starting out looking at their finances more seriously.

We don't know what your salary is or your what you do for a living. If you could provide more information such as job, salary, location, goals, etc. we as a forum will probably be able to give you some better advice.

Here's an online calculator to compare your net worth to your age group and salary range. It's by no means concrete, but use as you feel appropriate http://cgi.money.cnn.com/tools/networth/networth.html


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## the-royal-mail (Dec 11, 2009)

Use the time wisely and setup an emergency fund.

Of course, you will soon want a new car, upgraded living arrangements, new furniture etc. So you won't have as much extra income as you think. See how the first year goes but in the meantime you could think about funnelling any extra money to a TFSA, for which you currently have $15K of available contribution room.


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## PF_Enthusiast (Jan 21, 2011)

the-royal-mail said:


> Use the time wisely and setup an emergency fund.
> 
> Of course, you will soon want a new car, upgraded living arrangements, new furniture etc. So you won't have as much extra income as you think. See how the first year goes but in the meantime you could think about funnelling any extra money to a TFSA, for which you currently have $15K of available contribution room.


Just to add on TRM's post, a TFSA will most likely be more beneficial for you to invest in than an RRSP at this point, assuming your income is fairly low.


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## steve41 (Apr 18, 2009)

There are two notable reasons why you shouldn't obsess about saving for retirement when you are that young.... first of all, individuals' salaries don't rise with inflation... career advancement, merit raises.... your salary will be considerably higher once into your 40s. Secondly, you will (in all likelihood) be acquiring a home, paying off a mortgage and raising children. I see a lot of plans, and believe me, most individuals don't start to save in earnest until their 40s or beyond.


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## PF_Enthusiast (Jan 21, 2011)

steve41 said:


> There are two notable reasons why you shouldn't obsess about saving for retirement when you are that young.... first of all, individuals' salaries don't rise with inflation... career advancement, merit raises.... your salary will be considerably higher once into your 40s. Secondly, you will (in all likelihood) be acquiring a home, paying off a mortgage and raising children. I see a lot of plans, and believe me, most individuals don't start to save in earnest until their 40s or beyond.


I strongly disagree with you Steve. Anybody with intentions on being able to retire early, need to be looking at retirement when they're young. Compound interest!!! But OP didn't mention much, so that may not be his goal for savings. People who pay into an RRSP are in fact, saving for retirement. Unless of course they're using the Hoem Buyers Plan or just love the idea of withdraw tax and being driven into higher marginal tax brackets...


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## steve41 (Apr 18, 2009)

PF_Enthusiast said:


> I strongly disagree with you Steve. Anybody with intentions on being able to retire early, need to be looking at retirement when they're young. Compound interest!!! But OP didn't mention much, so that may not be his goal for savings. People who pay into an RRSP are in fact, saving for retirement. Unless of course they're using the Hoem Buyers Plan or just love the idea of withdraw tax and being driven into higher marginal tax brackets...


 I'm sorry, I didn't see the "I want to retire early" part of OP's post. If this is the case, I would be willing to modify my advice.


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## Sampson (Apr 3, 2009)

HappyJanuary said:


> Looking for either reassurance or a kick in the ***, whichever is most appropriate. Am I wrong? Is that a good amount?


How much do you earn. Despite being only 23, if you are earning $100,000/yr, then I would say $1000 is not enough. If you earn $35k, then it is probably more than can be expected.

You should decide what is a comfortable lifestyle, then set your savings rate according to your goals.

Our family savings rate has fluctuated anywhere between 15-40%. I'm quite happy with 25%, but when we can save more, we do.


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## kid5022 (Nov 14, 2010)

Wow i am so jealous
Turning 24, still in school, living with parents, lots of student loan, and no $$$

as for are you saving enough, depends on what you want?
a house, car, financial freedom, etc


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## iherald (Apr 18, 2009)

Sampson said:


> How much do you earn. Despite being only 23, if you are earning $100,000/yr, then I would say $1000 is not enough. If you earn $35k, then it is probably more than can be expected.
> 
> You should decide what is a comfortable lifestyle, then set your savings rate according to your goals.
> 
> Our family savings rate has fluctuated anywhere between 15-40%. I'm quite happy with 25%, but when we can save more, we do.


If he earns $100,000 a year, he's still saving 12% of his gross ($1,000 a month). That's fantastic. Can he do more? Maybe, but he's 23, let him enjoy life!


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## Sampson (Apr 3, 2009)

iherald said:


> If he earns $100,000 a year, he's still saving 12% of his gross ($1,000 a month). That's fantastic. Can he do more? Maybe, but he's 23, let him enjoy life!


Goals. Maybe the OP wants to buy an island somewhere, if so, then 12% probably isn't enough. To blindly say 12%, or even 90% savings rate is meaningless unless we know what is being saved for.

Also, more spending is not necessarily proportional to happiness.


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## iherald (Apr 18, 2009)

Sampson said:


> Goals. Maybe the OP wants to buy an island somewhere, if so, then 12% probably isn't enough. To blindly say 12%, or even 90% savings rate is meaningless unless we know what is being saved for.
> 
> Also, more spending is not necessarily proportional to happiness.


he's 23, he probably doesn't know what he's saving for. I know I sure didn't at the time. While it's true he may not be able to buy an island, I think he's doing a great job compared to everyone else his age and a lot of people a lot older. The magic of compounding interest will be a great asset to him.


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## bpcrally (Sep 12, 2010)

I'm pretty much in the same boat.

I'm only really capable of saving $12k a year as long as no surprises come up.. I make roughly 35k a year and am also 23.

I know the feeling that its not enough saved.. I know that I'm saving for a house, and 12K a year when looking at 2-300k house is scary


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## canadianbanks (Jun 5, 2009)

The absolute amount you are saving per month doesn't really matter, what matters is what % of your income are you saving. If you want to get out of the rat race early, you should aim to save at least 20-25% of your gross income and invest it.


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