How many times have you heard that you should be putting aside at least $50 or $100 a month into your savings account? And how many times have you been frustrated, either thinking that there is no way you can come up with that much or wondering if it should be a savings account or money market or a CD?

There really is no magic number of how much money you should be saving each month. Yes, you should be saving, but when and how much really depends on your own personal financial situation and goals. If you are burdened with debt, it does not make any sense to be socking away as much as you can and getting 1% interest at the bank or even 5% on your stocks when you are paying 10% interest on your car or 17% on your credit card. You will end up losing money that way. In recent times people have started taking money out of their retirement plans to pay off debt and are incurring huge penalties of up to 40% for doing so. It is best to focus on getting rid of that debt first so you do not jeapordize your future.

That said, you should not be putting all your money into your debt and have nothing saved up for rainy days or emergencies. You do need to put together a plan and a budget so that you can both get your debt paid down and have money available for those things that come up so that you do not land further in debt (i.e. we all know that cars need repairs from time to time, so if you save up now then when you need the money you will have it).

As you put your budget in place, you can also think of ways to generate more income to get out of debt and start saving. Perhaps it means getting a second part-time job or finding something like walking a dog or babysitting to bring in some extra cash. It could be that you have a particular skill that you could teach others and earn some money. See my article on generating alternate income for more information. The idea is that as you work on budgeting and controlling your spending, adding extra income will help you to pay down debt and then start putting money into savings and eventually into your investments (IRA, stocks, etc.).

So while there is no absolute number for how much money you should be saving, the take-away today is that you do need to make a plan and be sure that you are getting your debt paid off and then saving according to your financial goals.

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