How Much Money Should You Be Saving?
The amount that the average Australian family should save can vary based on a variety of factors, including income, expenses, lifestyle, and financial goals. However, there are some general guidelines that can be used as a starting point.
One widely recommended guideline is the 50/30/20 rule. This rule suggests that 50% of after-tax income should be allocated to essential expenses, such as housing, food, and transportation; 30% should be allocated to discretionary spending, such as entertainment and hobbies; and 20% should be allocated to savings and debt repayment.
Applying this rule to an average Australian family with a household income of around $80,000 per year, the breakdown would look like this:
Essential expenses: $40,000 (50% of $80,000)
Discretionary spending: $24,000 (30% of $80,000)
Savings and debt repayment: $16,000 (20% of $80,000)
Of course, this breakdown is just a guideline, and individual families may need to adjust the percentages based on their own circumstances. For example, a family with higher expenses may need to allocate more than 50% of their income to essential expenses, while a family with high levels of debt may need to allocate more than 20% of their income to debt repayment.
In general, it’s a good idea for families to save as much as they can, while still maintaining a comfortable standard of living. A common recommendation is to aim to save at least 10-15% of after-tax income, but the more a family can save, the better positioned they will be to achieve their financial goals and weather any unexpected financial challenges.