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Are You Saving Enough?

Investing Retirement Funding Insights


We don’t often talk about it, but Americans are in trouble. The savings rate in America today is so poor, the powers that be created a weeklong campaign with the sole purpose of encouraging us to SAVE! They call it “America Saves Week.

40% of Americans would not be able to pay for an unexpected expense of $400 - Federal Reserve1

During the 1970s, the average household in America had a savings rate in the double digits as opposed to today, where it is closer to 6%. That is the lowest savings rate since the 2008 financial crisis.2 As noted above, this is not new, it’s been happening for 60 years. The savings rate is so low that Government agencies, nonprofits, and financial institutions have created “America Saves Week.

There is no secret to saving money on a weekly or monthly basis, it really comes down to budgeting. Budgeting is essential to ensure your expenses do not outpace your income and allow you to save as a result. This has been known to be a fundamental element and key cog in the process of achieving financial success over long periods of time.  Unfortunately, despite the proven benefits, only about one-third of Americans maintain a household budget.While the reasons for this vary, one could argue that a lack of financial education in our grade school years could potentially lead to poor spending and saving habits in adulthood. One thing is for sure – It has gotten worse since the start of COVID-19. 

“7 In 10 Americans Live Paycheck To Paycheck” - Forbes4 

According to a Market Watch report, approximately 20 percent of Americans have no emergency fund, and about 50 percent are “concerned, anxious or fearful about their current financial well-being.”While the idea of building a budget, saving and documenting every single expense you have over the course of an entire month, and creating a comprehensive family budget may sound unachievable (and typically overwhelming) at first, the good news is, we have a simple solution to help ease your fears — it’s called the 50/20/30 budget rule. A fairly simple formula, this rule provides you with a three-part structure for your spending and saving, making it easier to get a clear picture of how much money is walking out the door each month, as well as where it is going.

The 50/20/30 Rule: How It Works

The 50/20/30 budget rule is often referred to because as stated earlier, it’s quite simple to follow. 

According to the rule:

  • 50: Half of your income (50 percent, or less) should be allocated for living expenses and essentials, such as rent and groceries.
  • 20: Twenty percent (or more) of your income should go to savings, investments, and any debt you owe.
  • 30: Thirty percent (or less) of your income should go towards everything you want, but don’t necessarily need.

An important note: the essential (50) and flexible (30) spending percentages are the maximum; you always want to try to stay below the recommended percent if you can. Obviously, the things in your “want” category are going to be what you want to limit the most; essentials and savings (in most cases) should take precedence. However, everyone has their preferred spending method according to their own beliefs and financial objectives.

Implementing the 50/20/30 Budget Rule

Now that you know the 50/20/30 budget rule, it’s time to execute it. To start, take a look at your pay stubs to determine the exact amount of money you take home every month. This amount is the amount printed on your paycheck or deposited into your bank account through direct deposit. This is very important because gross pay can be a drastically different number from your take-home pay (net). This amount will then be used as the foundation for your budget. If you’re self-employed, be sure to be extremely detail-oriented when it comes to tracking your income versus your expenses, and don't forget about putting aside a portion of revenue for taxes.

Download The Budget Worksheet Now!


Once you know how much money you bring home each month, it’s time to track all of the bills, items, and experiences you pay for every month. From your early morning Starbucks coffee to your water bill, you want to have a detailed list of everything you’re spending money on. After that’s done, create categories according to the 50/20/30 budget rule and put each expense into its corresponding group. 

Everything you need to know about getting your financial house in order is within this process. This exercise will provide you with a clear visual of your spending so you can have a better idea of what improvements need to take place. It's not fun but it is important. Eventually, as you adjust your spending and saving habits, you’ll realize how helpful the rule is for not only your future finances but also your peace of mind.


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About the Author

James M. Comblo, CFF
is a Partner and the Chief Compliance Officer at FSC Wealth Advisors. His greatest passion in the financial services industry is helping clients accomplish their dreams both with investments and their personal lives. To learn more about him click here.




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  1.  https://fred.stlouisfed.org/series/PSAVERT 
  2. https://www.statista.com/statistics/246268/personal-savings-rate-in-the-united-states-by-month/ 
  3. https://news.gallup.com/poll/162872/one-three-americans-prepare-detailed-household-budget.aspx 
  4. https://www.forbes.com/sites/zackfriedman/2022/02/08/shock-poll-7-in-10-americans-live-paycheck-to-paycheck/?sh=629d9ff255f6   
  5. https://www.marketwatch.com/story/half-of-americans-are-desperately-living-paycheck-to-paycheck-2017-04-04 
  6. https://news.gallup.com/poll/162872/one-three-americans-prepare-detailed-household-budget.aspx
  7. https://www.marketwatch.com/story/half-of-americans-are-desperately-living-paycheck-to-paycheck-2017-04-04