Dave Ramsey: Here’s How Much Money You Should Have In Savings

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However, 36% of all Americans said they kept $100 or less in this account.

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You can start right this week.

How Much Should You Have in an Emergency Fund?

Ramsey doesn't believe in setting a specific dollar amount for everyone's savings accounts. Instead, the right amount depends on the savings goal you're trying to achieve.

While others might be setting aside money for a car purchase.

The post on Ramsey Solutions points out that a savings goal isn't the same as saving for a rainy day fund or building a sinking fund. A rainy day fund is cash set aside to cover unexpected expenses that come up in emergency situations, like your house's roof leaking or you losing your job. On the other hand, money saved in a sinking fund is earmarked for expenses that are coming up in the near future, such as buying a new mattress.

The Right Amount to Have in Your Emergency Savings

Ramsey Solutions recommends changing this amount to $500 if you earn less than $20,000 a year.

Once you're fully funded in your initial emergency fund, he advises paying off all debt other than your mortgage in full. At that point, you can proceed to Baby Step 3, which is to stockpile three to six months' worth of essential expenses in an emergency fund. To calculate this amount, Ramsey suggests totaling up your regular, necessary expenses each month, including housing costs, grocery shopping, utility bills, and transportation.

When you have the final amount for one month, multiply it by three (or six) to determine how much you'd need for your emergency fund.

What Amount Should You Set Aside in a Sinking Funds Account?

The amount of money in your sinking fund, according to the post on Ramsey Solutions, is essentially the amount of money you set aside and budget for to cover a specific expense that you know is coming in the future.

Let's say you're planning to buy a new mattress in the near future. You've decided you'll spend around $900 on it, so every month for the next three months, you'd put aside $300 in your savings to reach that goal.

How Much Should You Save for Retirement?

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According to the Ramsey Solutions post, the recommendation is to invest 15% of your household income in retirement. It uses a $80,000 annual household income as an example. Based on that, you'd need to invest $12,000 for retirement each year.

The good news is there's no limit to the amount of money you can save - and should save - in your retirement savings account. If you have a retirement account, like a company 401(k) with a matching program, Ramsey advises taking full advantage of it and putting any extra money into a Roth IRA.

• 5. "You're not feeling secure and protected." "Your retirement savings are an essential part of your financial security, so you want to make sure your bank has robust security measures to protect your money from fraud or losses. Look for a bank that offers robust security features, such as encryption, firewalls, and robust authentication processes, to give you peace of mind."
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Dave Ramsey: This Is How Much Money You Should Be Saving