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How Much Should I Have Saved By 25?

“How much money should I have saved by 25?”

It’s a common question, but at that age, there’s a million different scenarios of where you could be in life!

  • You could be still living at home and saving,
  • working in your first job,
  • working in your dream job,
  • pursuing even higher education, or
  • living the #vanlife.

It’s hard to give prescriptive advice to a large range of situations, but let’s talk about a realistic amount of money to save if you want to hit retirement goals – something we all want. Starting your savings now will financially set up your future for success.

Let’s get right to it.

This post was written by our staff writer, Lindsey Smith.

how much saved by 25 years oldSo, How Much Should You Have Saved By 25?

Most experts agree that you should put 10% of every paycheck into some type of savings. This is a realistic amount of money that you can save while still working on paying down debt, like student loans or other debt you may have accrued. So, if you earn $45,000 per year, you’d want $4,500 of that to be in savings.

Then simply multiply that amount by how many years you’ve been working. If you’ve been working for three years, you should have $4,500*3 = $13,500.

A more aggressive benchmark is to have saved half of your yearly expenses. Using the same number above, if you were to spend $45,000 each year, you would want to have saved up $22,500.

After three years, that could be as much as $67,500!

Related: What Should Your Net Worth Be At Your Age??

Where should YOU be with your savings by age 25?

If you want to achieve the bare minimum, settle for option one — 10% savings each year. 

If you’d like to be average, take the average of option 1 and option 2 — roughly 30% savings every year.

And, if you’d like to be amazing, try to match option 2 — 50% savings every year! I doubt you’ll ever regret saving too much when you’re young!

Now, where should you put your savings at age 25?

If you don’t need the money till you retire and your employer has a great matching program, save it in a 401k. Your employer will match your contributions up to a specific limit, so you can also call this free money. Take advantage! You can also save it into a regular IRA, which like the 401k, will allow your money to grow tax-free.

Another goal, along with saving 10-25% of your income, is to make sure you have 3-6 months worth of expenses set aside in an account you can access quickly. This will give you a cushion in the event of a job loss or unexpected expenses, without having to go into debt.

Related: Keep Investing Simple – The Secret to Wealth

How much should I have saved by 25? It's a common question. Here's the answer!How Can I Make Saving Easier?

Even with the best intentions, when that paycheck hits, there always seems to be other things to spend the money on. Savings is rarely the first thing we are eager to do. Luckily, there are a few tricks that can help you out. 

Automatically save from your paycheck

Many payroll departments can automatically direct a percentage or specific amount from your paychecks into another account. When it doesn’t have to go through your hands to get into savings, it’s much more likely to get there.

Create a budgeting spreadsheet or use a budgeting app

When you can see where your money is going, you can find ways to cut back and increase your savings. You can also do the pay-yourself-first method and create a savings section of the budget that you allocate money to before all your other expenses.

No matter how you choose to use it, knowing what every dollar is doing is a key piece to good financial health.

(Derek likes for tracking savings. It’s simple, easy, and free!)

Give yourself a day or two before making purchases

Pressing pause on a purchase and taking a day or two to think about it will eliminate impulse and emotional buys, and will give you the space to decide if it’s something you really need or want.

Build a spot into your budget for “wants”

Allowing 20-30% of your budget to be for things you want will result in much more success than a budget that makes no room for spending. When you don’t budget for fun, you’re much more likely to spend an increased amount on things you want, and save little to nothing. 

Try a no-spending month

Many people like to do no-spend November, but you can choose any month you like. You can also alternate months, or choose one month per quarter. Take whatever you would’ve spent that month and put it into savings.

Related: How a No Spend Challenge Can Work For You

Round every dollar up

With an app like Acorns, every time you make a purchase with your debit card, it automatically rounds up to the next dollar and saves the difference for you. All those cents add up, and without any effort on your part.

Cut what you don’t need

If you live in an urban area and don’t require a car, get rid of it. Limit eating out at restaurants to only special occasions. Find things in your budget you don’t need, and save the difference.

Related: How to Drastically Cut Expenses

Shop sales and buy used

Buying clothes at the end of the season, shopping in used stores, upcycling old items or buying from craigslist are all ways you can find discounts on everyday items. Discipline yourself to put the difference into savings. (It’s better for the environment too!

Investing and Building Wealth Beyond 25

At 25, you’re in the best position to start investing. It’s hard to stay focused on retirement because it seems so far off, but here’s an example of why it’s so important to start right where you are. This is adapted from the book “The Random Walk Guide to Investing” by Burton Malkiel.

“William and James are twin brothers who are 65 years old. 45 years ago (at the end of the year when he reached 20), William started an IRA and put $2K in the account at the end of each year. After 20 years of contributions, William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10% per year tax-free.

James started his own IRA when he reached the age of 40 (just after William quit) and contributed $2K per year for 25 years, making his last contribution today. James invested 25% more money in total than William. And, he also earned 10% on his investments tax-free. What are the values of William’s and James’s IRA funds today?

William has $1,365,227. James has $218,364. James invested 25% more than William, but through the magic of compounded returns, William’s IRA fund is worth more than six times as much!”

Because William started earlier, he had more than 6x as much money saved for retirement than James.

Related: How Much Should You Have Saved by 30?

“How Much Should I Have Saved by 25?” As Much as Possible…

Be a William.

Start investing your money now. Choose a mix of stocks, bonds, and real estate through your 401k, IRA, or any account you’re using for retirement savings.

Learning to live within your means, saving from every paycheck, and investing through your retirement account are the three pillars of a solid financial base. Balance fun (so you can enjoy your 20s) along with a solid savings plan so you can enjoy the other end of your life.

What’s your answer to the question, “How much should I have saved by 25?”

Grow Rich Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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