Her Campus Logo Her Campus Logo
placeholder article
placeholder article
Career > Her20s

How Much of My Paycheck Should I Really Be Saving?

Although it’s not commonly thought of in this way, financial health is a vital component of wellness, and one that causes young adults more anxiety than you might think. PwC’s 2019 Employee Wellness Survey shared the most common financial concerns of millennials as the fear of not having enough in emergency savings (62%), not being able to afford monthly expenses (41%), and not being able to keep up with debt payments (29%).

Although millennials have an average of over $27,000 in personal debt, there’s also a large portion of the population who lie on the other end of the spectrum, also known as “oversavers.” Putting too much money into long-term savings (ie: maxing out on an employer-matched 401k account straight out of school might have negative effects on young adults, causing them to sacrifice on short term goals and miss out on the joys of young adulthood. Just like we don’t need a dietetics degree to understand the basics of a healthy eating, we don’t need to have a finance degree to develop healthy saving and spending habits.

The goal is to work smarter, not harder.

a calculator covers a spreadsheet of expenses
777546 | Pixabay

The 50/30/20 rule

Perhaps the most common and simplest recommendation for budgeting is the 50/30/20 Rule. First used by Elizabeth Warren and Amelia Warren Tyagi, this plan allows for 50% of your paycheck to go towards necessities including rent, food and utilities, 20% of your paycheck to go towards savings/paying off debt, with the remaining 30% left for discretionary spending.

For some young adults at the start of their career, it might be necessary to spend more than 20% on savings and debt payments. On the other hand, other young adults may live in areas with costs of living that require more than 50% of their paycheck be put towards necessities. Although opinions as far as specific percentages differ, experts do agree that saving anything is better than nothing, and the sooner you start, the better. It’s especially important to prioritize paying off credit card bills in full to develop a good credit score at an early age.

Tip: an easy way to help make up for any discrepancies in the 20% category is to set aside any additional or unexpected income (holiday bonuses, birthday money, tax returns, etc.) directly into savings or paying off debt.


Track your financial behaviors

It’s really hard, if not impossible, to create a personalized budget and savings plan without knowing where our current expenses are going. Keeping a running spreadsheet that categorizes where our money goes by breaking it down on a monthly basis creates a framework for developing a personalized budget, helps uncover any unnecessary expenses, and highlights where we have wiggle room should we want or need it. (Note: this is not the same as periodically checking our bank account statements!).

There are many free online templates and applications that you can use to help with efficiency and organization. Mint is a personal favorite that allows you to set a budget, and it’ll send notifications when you exceed your predetermined limit by syncing all of your accounts into one platform.

fire truck
Photo by SVP Studios from Unsplash

Prioritize an emergency fund

During your 20s, a common recommendation is to have 3-6 months’ worth of income set aside in case of job loss, unexpected bills or other unforeseen events. This number might sound impossible for many young adults to reach, especially those with lots of debt or who are just at the start of their career, but this fund can be built over time and is an important area to focus on. Remember, the idea of this account is that it’s for emergencies only — it’s not a savings account for big-ticket items such as vacations or phone upgrades.

Kacey*, a 24-year-old living in Sedona, Arizona, learned this the hard way. “About 14 months into my first full time job out of college, I used my savings to purchase a new car,” she shares. “I thought this was a safe financial choice because I was doing well in my job. I figured I could make up for losing savings in just a few months as I had before. After the COVID lockdowns started, I got laid off from my job and found myself without any savings to turn to. I ultimately had to move back in with my parents because I wasn’t able to afford the rent I was paying.”

Tip: Create a separate savings account specifically for your emergency fund and commit to depositing a specific portion of your monthly income into it until you reach the 3-6 month mark.

Related: 4 Money Lessons I Had to Learn After College, & You Probably Should Too

Putting money in a piggy bank
Photo by Damir Spanic from Unsplash

401(k) contributions

In short, a 401(k) is a retirement account that places a predetermined percent of your pre-tax (depending on which type of account you open!) income directly into a retirement fund that is sponsored by your employer. The amazing thing about a 401(k) is that employers will match some or all of what you contribute (typically either 50 cents or $1 for every dollar, up to a certain percentage). A common recommendation is to have the equivalent of a years’ worth of your salary in your 401(k) by the age of 30. There are some great online calculators that will help you determine how much you need to contribute to your 401(k) in order to reach your retirement goals based on your monthly income and employer’s contribution. You can always increase the percentage that you contribute as your salary increases and as you pay off any existing loans.

Personally, my favorite part about my 401(k) is that it gets taken directly out of my paycheck without me ever having to think about it. My money mindset is based around my net take home pay, or the amount of money that actually gets deposited into my bank account each pay period.

image of three friends watching the sunset
Photo by Simon Maage from Unsplash

Know what you value & what makes YOU happy

Tracking monthly expenses gives us an objective view of where our money is going. It’s useful to compare those numbers to personal values by figuring out what genuinely makes you happy. Life is meant to be enjoyed, and healthy financial behaviors are meant to enhance our lives, not restrict them. 

If you notice that you spend $90 a month on Starbucks and $100 on a massage, think about what it would be like to cut down on those areas of your life. Is there a way you can get the same benefit that those items give you without spending quite so much money? For example, instead of getting Starbucks every day, would you be satisfied by committing to only going on the days you work? If a daily Starbucks run genuinely does make you happy, how can you change your mindset to think of your daily latte as being an empowered choice, rather than one made on autopilot?

Personally, I’ve found that going to weekly yoga classes is something that fills a very important need in my life, even if it might be an unnecessary expense for others. I’ve worked out my budget to allow myself one in-person yoga class every week and I give myself permission to fully enjoy it. I’ve also learned that going to yoga any more frequently than that doesn’t bring any more benefit to my life, but it does drain my budget.

Plan for the future

It’s helpful for young adults to begin envisioning future goals early in their adult years. Even if 20-somethings aren’t currently able to set aside money for future big-ticket items such as a wedding ring or new car, gaining clarity on questions including, “Do I/when do I want to have children?” or “Where do I want to live 10 years from now?” or “Do I want to own my own home one day?” creates a framework for thinking about how to handle future financial decisions and emphasizes values-based purchasing. It’s a lot easier to say “no” to an unnecessary $100 pair of shoes when we believe that we are instead setting aside that $100 to say “yes” to something that is vastly more meaningful.

Reading book in bed
Photo by Gabby K from Pexels

Study up on financial literacy

When asking young adults what they felt they needed to become confident in their finances, the overwhelming response was “books,” as shared by Auburn University senior Greta Doe — and for good reason. Books are a low-cost investment that provide ample knowledge. Broke Millennial by Erin Lowry is a relevant, simple, and entertaining read that offers young adults a step-by-step process for managing money, discussing finance in relationships, negotiating pay raises, and more. The Automatic Millionaire by David Bach is a timeless classic, often referenced by financial experts, that covers the basics of personal finance and provides education on healthy financial habits based on personal priorities and values. Targeted specifically to millennials, Grant Sabatier’s Financial Freedom: A Proven Path to All the Money You Will Ever Need gives practical advice to help young adults reach financial independence and create mindset changes to live fuller lives in general.

person typing on a laptop
Photo by Kaitlyn Baker from Unsplash


Thinking about investing might be overwhelming for some individuals who are still paying off large amounts of debt or who have yet to build a sufficient emergency fund. Even if we don’t currently have the money to place into making investments, learning about the market and understanding the importance of compound interest is something that we can do as young adults to help set ourselves up for future success without actually having to transfer any money. Short term investment losses are common, which is why investing in our 20s allows for time to capitalize on long-term market growth. If you are debating whether or not to put any money into investments, a common recommendation is to not invest any money that you intend on needing to use within the next 5-10 years. 

two women sitting at table signing papers
Photo by Gabrielle Henderson from Unsplash

Expert opinion

In 2014, Todd Kunsman,  founder of the blog “The Invested Wallet,” found himself barely scraping by paying rent, two student loans and unexpectedly losing his job right before Christmas. The financial struggles he went through in his early 20s became the catalyst for him making changes in both his financial behaviors and in paving an entirely new career path. His favorite piece of financial advice for 20-somethings? That they begin investing in themselves immediately.

“Dedicate your time and energy into learning, making some mistakes and taking some minor risks,” he shares. He encourages young adults to practice continuously learning new skills, delay making big purchases, and invest their time and energy into a side hustle. “While I had a bit of a later start to my finances in my late 20s, it has been impactful to where I am financially today. My only regret is not starting sooner,” he shares, “at the same time I’ve learned so many lessons that have helped me as I’ve transitioned now into my early 30s.” 

Every young adult is in a slightly different place when it comes to financial status and background. If we still feel lost in our financial situation or if the subject of money still causes us a lot of anxiety after taking steps to improve our financial literacy skills and habits, getting a second, objective opinion from a financial advisor may be of benefit. Although the specific amount that we place into savings will change over time and on an individual basis, knowing the importance of early spending and saving habits will set us up for both present day and future success so we can live the fullest, richest lives possible.

*Name has been changed

Follow Her Campus contributor Emily Green on YouTube or Instagram.


SLU '20

emily is a music lover, health & wellness advocate & people person. some passions include: values-based living, self-expression & identity formation.