Some of the questions we get best generally from our banking apprenticeship audience at Freedom Personal Finance tend to be the "how much" questions. They appetite to apperceive how abundant money they can get abroad with spending or how advancing they should be in extenuative for a goal.
Here are some of the best accepted "how much" questions we get - and the answers we about give.
Q: How abundant should I absorb on a car?
A: Whatever you can pay in cash, afterwards borer your emergency fund. Car payments will rob you of your banking future. A $380 car payment, if invested instead, will be account added than $380,000 in 30 years. Pay banknote for your vehicles, period. Bottomward the road, you'll be animated you did.
Q: How abundant should I save for emergencies?
A: Many banking admiral will say 3 to 6 months of active expenses. We say that's a acceptable start, but you should absolutely aim for a beanbag of 6 months to 1 year. As we accept seen, an bread-and-butter abatement can annoyance on for a actual continued time. And a ample emergency armamentarium can acquiesce you to save money by accustomed beyond allowance deductibles.
Q: How abundant abode can I afford?
A: None - until you are debt-free and accept a absolutely adjourned emergency fund. Afterwards that, get a acquittal of no added than 25% of your take-home pay on a 15-year fixed-rate loan, with at atomic 10% down. Your emergency armamentarium should still be abounding afterwards closing on the house.
Q: How abundant do I charge to save for old age?
A: Notice that we didn't say "retirement." Some bodies may adopt to never "retire," but about anybody will get old. So save as abundant as you can, alpha as aboriginal as you can, and do not anytime stop saving.
For anniversary dollar you do not save at 25, you'll accept to save two inflation-adjusted dollars if you alpha at 35, four at 45 and eight if you alpha at 55. In short, if you abridgement abundant accumulation at age 45, you are in austere trouble.
If you plan to draw bottomward the arch of your investments at a safe amount of 2% to 3% annually, you charge a backup egg of about $2.5 actor to be altogether safe. The further you are beneath this target, the greater the adventitious you'll run out of money afore you run out of breath.
