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Question for the Money Doctors

Question submitted on Sep 28, 2013.

Question

What is the amount of money I should be saving each year as a percentage of my gross income? This does not include retirment savings plans. thx.

Answer

The money you save should be split between retirement, intermediate savings, and short term savings.

First is short term savings. This should be liquid and available in the event of emergencies (car accident until you get the insurance check, vacation, etc.)

Intermediate savings should be a&nbsp3-5 year period (car, big vacation, etc).

I would FIRST, max out my 401K if you have that (say 15%). Then, if you can afford it another 10% between short and intermediate.

Obviously 25% is a LOT, howe3ver it WILL - in the long term- put you in the top of Americans as far as wealth by the time you retire.

I try to do 10% outside my retirement account.


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