Why You Should Save and How Much
Save early and often.
Our two cents
Our two cents
Think of saving as paying yourself first. Consider setting up an automatic deposit to a savings account each month so you won't be tempted to shortchange yourself.
Whether you're working toward a short-term goal or retirement, the sooner you start, the better.
Here's why: The earlier you start saving, the smaller the percentage of your income you need to save. Conversely, the longer you wait, the larger the amount of your salary you're going to have to put away each year to reach your goal.
Start with 10%—and go up from there
Saving 10% of your income can be a good guideline for getting started, especially if you're under 30. However, the later you begin to save, the more you should set aside.
Consider this example:
In this example, Maria and Ana each invested $3,000 every year on January 1 for 10 years—regardless of whether the market was up or down. But Maria started 20 years ago, whereas Ana started only 10 years ago. So, although they each invested a total of $30,000, by the end of 2025, Maria had about $135,000 more because she was in the market longer.
Source: Schwab Center for Financial Research with data from Morningstar. Invested in a hypothetical portfolio that tracks the S&P 500® index from January 1, 2006, to December 31, 2025, for Maria, and from January 1, 2016, to December 31, 2025, for Ana. The end amount includes capital appreciation and dividends. Dividends are assumed to be reinvested when received. Fees, expenses, and taxes would lower returns. Ana's average annual rate of return is 14.82%; Maria's is 11.00%. The actual rate of return will fluctuate with market conditions.
Dividends are not guaranteed. Dividends and interest are assumed to have been reinvested, and the example does not reflect the effects of taxes or fees which would cause performance to be lower.
Indexes are unmanaged, do not incur management fees, costs, and expenses (and/or "transaction fees or other related expenses"), and cannot be invested in directly.
For illustrative purpose(s) only. Investing involves risk, including loss of principal.
Past performance is no guarantee of future results.
Find out what it will take to reach your goals
No matter what you're saving for—a car, a vacation, a down payment on a house, or retirement—determine what it will take and how long it will take to reach your goals. Use our Savings Calculator for an easy way to get started.
Make saving a habit
Once you've gone through the budgeting process and understand where your money goes each month, start thinking about saving for the future. People who learn to save when they are young have a valuable head start. But no matter where you are in life, it's never too late to get on the right path.
How a $10 lunch could turn into $5,000.
How a $10 lunch could turn into $5,000.
If you took your lunch just one day a week and instead put that $10 into an interest-bearing account, you would have more than $5,000 within a decade (assuming a 1% interest rate). It just goes to show the power of saving even a small amount.
Keep learning
Keep learning
Find out more about how compound growth can benefit you over time, and prepare a savings plan with our eight savings fundamentals.
Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.