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What do you want? A lot of money or quick money? If you want quick money, then you go for a job, earn, and then spend for your expenses. But if you need a lot of money, then you need to save. We earn money each day in order to live a better life. So start saving money even before you reach the age of 21. Ask yourself how much money should I have saved by 21, to reach a better financial position in your 20s.

If you start it now, then you would find it easy to save for your retirement. The rules you have to save your money look really easy when you have it on paper, especially at the age of 21. 

But in practice, you need to give importance and work on it, because doing what is on the paper will surely be a bit complex. 

How much money should I have saved by 21?

So how much money should you have in savings by 21? 

Throughout this article, you will find some guidelines to find out the answer for how much money should I have saved by 21 and we will be talking about the average money savings of a 21-year-old. So if you are concerned about your financial future and want to prioritize saving money, continue reading to learn more about how to save money at 21. 

Read on how to make money as a teen

Why do you need to save money at an early age? 

According to the survey of Bankrate, it is found that only about 4 in 10 Americans have enough savings to cover an unplanned expense of $1000. This means that half of the Americans are in a situation to find other means to pay for other things like emergencies or a car repair. 

Of 1004 U.S adults, just 44 percent have saved enough money and so less than half of adults could pay a large expense with their savings. 

It is found that an average 21-year-old has less than $1000 in savings. According to the survey by GoBankingRates, it is found that almost half of the 21-year-old have no savings. 

Moreover, when you are in your 20s, retirement will seem so far away and you will hardly feel it is real. This is one of the common excuses most people give to justify why they do not need to save money in their early 20s. If you are one who is going to give such excuses, then you will be in that half of adults who are struggling to pay large expenses.

Before you reach 21, probably you would not have earned a lot of money as it would be the time you would have begun your career. But you can stand out from the majority, by using the time you have to save for a better life. This will look more pleasant and exciting. Maybe you are still paying off your student loans, but you can still save a small amount for retirement, and this is going to make a huge difference in the future. 

It is not that you need to be richer, but still, you need enough money to live when you become too old to work. So money saving at 21 is the perfect time to start saving for a better life in the future. 

How much money should I have saved by 21?

For an average 16 to 19-year-old who is in the workforce will most probably have an annual salary of $22,620. When you are 20, if you say that your income goes up by $29,962, then you would be having $24,088 in savings at the age of 21, if you are following the 50-30-20 rule. This amount assumes that the person is working from the age of 16, up to the 19th birthday.

But there is nothing to worry about if you don’t reach this goal because many young adults don’t even have this amount. 

Why money saving at 21 is hard for many? 

Why money saving at 21 is hard for many? 

You may have received advice to save 20% of your paycheck. But if you are receiving a low income, you will find it hard to save 20% and for many, earning a lot of money is not realistic. Because you would not be able to work full time, as you are going to school or other work, and so surviving with a part-time job or side hustles. 

Both your income and expenses will influence the rate of your savings. If you have student loan debt, your expenses are going to be higher and you will most probably be focusing on paying it off first. But if you are living with your parents, saving is easier. 

But if you understand the importance of saving money, you can find some simple ways to do it. When you commit to saving money, you are actually making an investment in your own future. Money saving at 21, is a great time to get to grips with budgeting and planning for a pension. But this is not taught in the schools, and they do not dig deep into it. Most of the time, we need to look at money management and educate ourselves. 

Even if you have a rough idea of how the system works, you can start to work accordingly and build up your financial position. The amount people need to save and the amount they actually save will have a huge difference. 

How to save money at 21? 

More than the actual savings balance, the habits you build at the age of 21 matter a lot more. Even if you are not saving a lot of money, it is still going to shape with time. So here are a few habits you can follow to develop and achieve your financial goals, no matter how big. 

The 50/30/20 rule

The 50/30/20 rule

There is a rule called the 50/30/20 rule that says how to save money at 21. This is actually a system of budgeting because if you are trying to save money, this is one of the simple and reliable ways. 

This budget method needs no detailed categories and so can be a great tool for the people who have no patience to track their spending. This needs you to track and divide the expenses into three main categories,  and they are,

When you have this type of division in a category, it reduces the amount of time you have to spend detailing your finances. Instead, you can focus more on the big picture. 

This is perfect for most people to budget, but you need to find out whether this system is right for you depending on your circumstances. This might help some people to track and focus on finances without categorizing each individual expense. But on the other hand, the lack of structure will make it harder for some people to find and improve their spending habits. 

So it is you who needs to decide whether this method suits you or not. This method doesn’t suit high-income earners, because it will make spending too much one wants. 

To do this, you need to calculate how much money you need to save on your wants, needs, and savings, by calculating and deducting the after-tax income. You need to allocate it as 50%, 30%, and 20% of your income. And then decide which expense goes into which category. 

Build an emergency fund 

Age doesn’t matter here. But building an emergency fund with three to six months’ worth of living expenses at the age of 21 is an advantage because your living expenses will be typically low and you can probably get away with the three-month minimum if you have health insurance and don’t have kids, or own a house. 

You can budget a small amount of your income and put that into your savings account for the emergency fund. That doesn’t matter even if it is $10 or $20 a week. You can gradually increase your savings once you get a steady income. 

Set up saving accounts in different banks

If you have all the money in the same bank and check the balance often, then saving money is less possible. Here when you set up saving accounts in different banks will help you, because here the out-of-mind trick is working. This will reduce the temptation to keep taking out the savings into checking because you will not see it. 

When you have a system like this, you will not be able to move the cash quickly as it takes about two business days to clear those funds. So make sure to have some savings at the main bank in case of emergency or if you need to pull out cash quickly. 

Do a cash diet

You might be a person who thinks that you are spending more money faster when you have cash. The cash may disappear quickly from your wallet as soon as you get it. If so, this is one of the effective ways for money saving at 21. It is cleansing the financial world. Even though it is not a long-term solution, it can still help you to get your finances back on track. 

Do a cash diet

Choose a month to only spend cash for your day-to-day expenses. First of all, run your cash flow, by finding out how much is coming in and going out. You have 4 weeks in a month and have $1000. Divide the amount by 4 and then you will have $250 for a week.

You can spend this on anything and can use your card anytime. Then take the corresponding money and roll it over to use for the next week, which is if you are spending $20 in the first week, roll the next $20 to the second week. 

When you purchase things from your cash, it will help you to know how fast your money is going out and so will make you think twice before you make your purchase. 

Do not get into a lavish lifestyle

The best and most important thing to do to reach your savings goal is to stay without getting into a lavish lifestyle. When you get into such a lifestyle you will have to increase the standard of living whenever you start to make more money. At the age of 21, you probably do not need to live a luxurious life. And if you try to maintain your standards normally, you will begin to have a better life. 

Living a controlled lifestyle doesn’t mean that you need to eat normal food, and live in a room with your friends. It is about increasing your expenses in small amounts as your income increases, without increasing it in a large amount. 

More than focusing on how many dollars you earn, focus on the habits you follow to build and save more money. If you can make money saving as a regular practice and live below your means, you will achieve financial success in the future. 

Avoid using credit card

For a lot of young people, student loans are a big source of worry. Apart from the student loans, if you are going to have credit card debts, they can be far more toxic. When you carry a credit card balance, the average interest rate is 16% and this is considered much higher than the average interest rate for student loans. 

So make sure to pay off any balance you have once you have set aside the money for your emergency fund. It doesn’t mean that you should avoid credit cards completely because using them is one of the best ways to build a credit history. But the suggestion here is, to avoid charging anything that you can’t afford to pay at the end of the month. 


It doesn’t matter if your savings is below 20% of your yearly income. But try your best for average money savings to ensure that you will retire with little financial worries. Saving is not only about increasing your income and decreasing your expenses, but it is also actually a way to make money work for you and so it is recommended to start it at the age of 21. 

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