What is the recommended percentage of income to save?

The recommended percentage of income to save is 20%. Saving 20% of your income aligns with the widely accepted financial guideline known as the "50/30/20 rule." This rule suggests allocating 50% of income to necessities, 30% to discretionary spending, and 20% specifically for savings and debt repayment.

This guideline is significant because it encourages individuals to prioritize their savings, which can be vital for building an emergency fund, planning for retirement, or making significant purchases in the future. Saving a substantial portion of one’s income can create a financial buffer and increase financial security, allowing for greater flexibility in responding to unexpected expenses or changes in circumstances.

In contrast, while saving as little as 10% can be beneficial for some individuals, and higher savings rates of 30% or even 50% might be appropriate for specific financial situations, the 20% benchmark is often seen as a balanced and achievable goal for most people. It encourages responsible financial habits without overly restricting one's ability to enjoy current income.