How much money you should save on each paycheck

If the last two years have taught us anything about money management, it’s that having a savings set aside is crucial.

Despite the importance of having savings, however, research shows that 45% of Americans have less than $1,000 saved — and in an emergency, $1,000 may very well not be enough. To make sure you have enough money to cover the worst case scenario, it’s essential to set aside a portion of each paycheck.

Financial security aside, saving can provide many other benefits. Interest rates are on the rise and having stronger savings would allow you to pay off high interest debt, such as credit cards. That’s why, given today’s unstable economic climate, financial experts recommend getting out of debt as soon as possible.

For starters, having savings helps you avoid going into more debt to cover your purchases. It would also give you more room to try new things professionally and take more risks without worrying as much about the impact your finances might have.

Although we have established that it is important to save, the next question is how much should we set aside?

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How much you should save on each paycheck

Use a High Yield Savings Account for all your savings needs

Determining how much to save is tracked quickly by finding exactly where to put it. Your best bet is in a high-yield online savings account, which earns more interest than a traditional savings account at your local bank. Select LendingClub High-Yield Savings ranked among the top accounts because it offers some of the highest returns on your money, with a 2.07% annual percentage return, or APY.

LendingClub High Yield Savings

LendingClub Bank, NA, Member FDIC

  • Annual Percentage Yield (APY)

  • The minimum balance

    No minimum balance required after $100.00 to open the account

  • Monthly fee

  • Maximum transactions

  • Excessive transaction fees

  • Overdraft fees

  • Offer a current account?

  • Offer an ATM card?

If you can’t afford to save 20% on every salary

Tips for knowing how much to save

At the end of the line

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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