Whatever your age, it’s never too early or too late to start saving money. And whilst you’re likely to have different priorities for your money at various stages of your life, it is always recommended that you have some savings tucked aside should you need them.
It isn’t always possible to anticipate events such as being made redundant or having your car break down, resulting in unexpected costs that you need to deal with, but having savings put aside for these kinds of situations helps provide you with some security. Despite this, however, 1 in 10 UK adults in the UK don’t have any savings at all and 41% of adults don’t have enough savings to live for a month without income.
As a general rule, it is advisable to have between 3 and 9 months’ worth of salary in an instant access savings account to keep you afloat if you find yourself out of work. But aside from saving a lump sum for a rainy day, arguably one of the most important events to save for is retirement, making it a good long-term goal to focus on.
Working towards a big goal can be tricky, but breaking it down can make it feel far more achievable. In this article, we’ll cover how much you should aim to have saved at different ages to give you smaller goals to work towards, as well as recommend some ways to manage your money better so you can reach your targets.
How much money should I have in savings?
How much you should have saved does depend on your overall goal, however, the majority of people will want to make sure they are properly prepared for the future and any eventualities — this is why having an emergency fund is important.
Having emergency savings should be your first priority. However, once you have this covered and your financial situation is more stable, then you can focus on the long-term goal of saving for retirement. In order to make this feel more achievable, we’ve broken down how much you should be trying to save by different ages so that by the time you retire, you’ll have a comfortable nest egg to use.
Of course, how much you save will be dependent on your annual income. We’ve used the average salaries in the UK as examples basis for identifying how much you should aim to have saved by each milestone.
Below is a summary of the annual salaries of men and women in the UK in 2021, broken down by age:
| Age Bracket | Male | Female |
| 18 to 21 | £18,392 | £17,005 |
| 22 to 29 | £26,856 | £25,115 |
| 30 to 39 | £34,210 | £30,540 |
| 40 to 49 | £38,463 | £31,679 |
| 50 to 59 | £36,000 | £28,811 |
| 60 and over | £30,944 | £24,850 |
Adults between the age of 40 and 49 earn the most, reaching a peak in their careers when they can put more money aside for their nest egg. The age bracket in which adults earn the least is 18 to 21, during which time budgeting will be crucial to get to a set savings target.
It is also worth noting that the salaries of adults in the UK depend on several factors, including experience (hence why older individuals generally earn more), location, and job industry. For example, individuals living in London will be able to command a higher salary as companies generally pay more to compensate for high living expenses.
How much money should I have saved by 25?
There is no set amount of money recommended for those aged 25 and younger. The reason is that everyone’s situation is different, and most young adults have expenses such as rent and paying off loans for education, meaning they can put less aside in their savings.
This being said, it is recommended that you try to put away 10% of your annual income into savings to help build up an emergency fund.
How much money should I have saved by 30?
The recommended amount of savings you should have by the age of 30 is half of your annual salary. So, say you are a female earning the average salary for your age bracket (30 to 39), you should be aiming to have around £15,270 in savings — half the average salary of £30,540.
How much money should I have saved by 40?
By the age of 40, it is recommended that you have three times your annual salary in savings. With the average salary for males and females between the age of 40 and 49 being £38,463 and £31,679, respectively, you should be aiming to have between £95,037 and £115,389 in savings.
It is also worth noting that between the ages of 40 and 49, your salary will likely peak at the highest point in your career, meaning it will likely be possible to put a larger proportion of your salary towards your nest egg.
How much money should I have saved by 50?
By the age of 50, you should have between 3 and 5 times your annual salary in savings. So if your annual salary is £36,000, you should have between £108,000 and £180,000 in savings.
How much money should I have saved by 65?
By the age of 65, the recommended savings target is between seven and thirteen times your pre-retirement income. The reason your target is based on your previous salary is due to the fact that as you are gearing up toward retirement, you will likely be working fewer hours — that is, if you are working at all.
So, if your pre-retirement yearly salary was £36,000, you should aim to have between £252,000 and £468,000 in savings to set you up to live comfortably during your retirement.
How can I manage my money better?
The first step to managing your money better is to “pay yourself first”. Essentially this means that before you receive your paycheck, you have made a plan to pay a portion of your monthly income into a savings account or ISA as soon as you receive your salary — this will also reduce the temptation to spend it on other things.
Once you have sorted out your finances to pay yourself first, another key step to managing your money effectively is to set up automated banking. Not only will this make your life easier, but it is one of the most effective ways to save money. The main reason for this is that you can set up your main bank account to deposit a set amount automatically into your savings account on payday, meaning you are less likely to spend it.
Automating your banking also means that you can separate your money into specific accounts so that you have different amounts going into more than one place such as an ISA, savings account or standard bank account.
Another way to manage money better is to work out a reasonable budget for your outgoings based on your monthly expenses. From here, track your spending to see your progress and to see if you are within budget. If you do find that you consistently spend too much money each month, you will also likely be able to identify where you can cut back on unnecessary expenses such as eating out or unused subscriptions. Once you have identified where you can cut back, the best thing to do is make sure you redirect that money into savings straight away so you don’t just end up spending it elsewhere.
If you have been able to stick to your budget consistently, you can also reassess your situation to identify whether you are able to put more money aside each month into savings. This is also relevant if your salary increases; whilst you may not want to deposit all your spare money, you can increase your savings input as your salary increases.
How can I save more money?
There are several ways in which you can increase the amount of money you save each month to reach your savings goals quicker:
- Reduce your monthly outgoings: it goes without saying, the less you spend, the more you can save. Identify where you can cut back on unnecessary purchases and save on your regular outgoings such as food shopping. It is also worth using price comparison sites to see whether you can get a better deal on utilities like broadband, gas and electricity — often, you can get a better deal as a new customer when you switch to a different provider.
- Cut down on travel expenses: whilst you may not be able to reduce how much you travel to work, it is possible to reduce your expenses in other ways. For example, check for cheaper petrol or diesel in your area, use loyalty card schemes, or use public transport more.
- Cancel unused subscriptions: as previously mentioned, cancel any unused memberships or subscriptions such as magazine services or your gym membership if you have not been making use of them. They may seem harmless, but having several on the go can really add up.
- Look for discount codes: whether it’s for your weekly shop or your bills, there are plenty of discounts and offers available to make use of to save you some money.
- Learn basic skills for home maintenance: paying for home repairs can be costly, and often with some simple DIY skills and knowledge, the cost can be dramatically reduced.
- Check for tax rebates: you may be eligible for tax reductions or rebates depending on your personal circumstances so it is always worth checking whether you can claim any.
- Consider investing your money: for the long-term, standard savings accounts do not generally offer high-interest rates. Instead, investing your money carefully can increase the returns you make, helping you reach your goal faster.