By the time you're 25, you probably accept accrued at least a few years in the workforce, so you may be starting to think seriously about saving money. Just saving might withal be a challenge if yous're earning an entry-level salary or you have significant educatee loan debt.

By historic period 25, you should have saved almost $20,000. Looking at data from the Bureau of Labor Statistics (BLS) for the outset quarter of 2021,  the median salaries for total-time workers were equally follows:

  • $628 per week, or $32,656 each year for workers ages 20 to 24
  • $901 per week, or $46,852 per yr for workers ages 25 to 34

Financial advisors often recommend saving xx% of your income for retirement, emergencies, and major purchases. If you merely historic your 25th birthday, have earned the median salary of $32,656 for your historic period grouping for each of the by three years, and are saving the recommended 20%, so you should have about $20,000 in the depository financial institution.

Your actual earnings and work history may vary significantly, of course. If you're nowhere near that number, don't panic. Saving 20% of your coin is not realistic for many 25-year-olds. Fifty-fifty if you're behind on saving, you lot nevertheless have plenty of time to grab upward.

A woman holds her retirement savings in a jar.

Image source: Getty Images.

What'due south a realistic savings charge per unit at age 25?

The truth is that saving coin at age 25 might not be that much easier than saving money at age 21. If you spent the past three years earning the median salary of $32,656, your budget is probably pretty tight. More than likely, saving twenty% of your salary is incommunicable -- unless someone else helps with your expenses.

If yous really accept $20,000 saved at age 25, y'all're way ahead of the national average. The Federal Reserve's 2019 Survey of Consumer Finances found that the median savings account residuum was $5,300 beyond households of all ages, not just 20-somethings.

If y'all don't have much extra coin after paying your bills, don't focus also much yet on saving xx% of your income. Your real goal is to learn to live on less than you lot earn and save the rest.

How to save money at historic period 25

Even if yous tin can only save five% or x% of your income, that'due south however a good offset if y'all tin can commit to increasing that percent every bit your income goes up. Follow these tips to boost your long-term savings rate:

Build your emergency fund first

Your first priority is to salvage 3 months' worth of living expenses in an emergency fund. That's money that you go along in a savings account, not the stock market, so that you lot tin can apace admission it if you lot need information technology.

Eventually, yous should have 6 months' worth of emergency savings. Simply once you lot're at three months, yous tin focus on another financial goal, too. For example, you could put one-half of your extra money toward emergency savings and the other half toward investing or paying off debt.

Pay off credit cards before student loans

Unless you have private educatee loans with unusually high interest rates, you're probably paying the nearly interest on whatsoever credit card debt yous're carrying. Focus on paying off credit cards offset and then tackle those student loans.

If you lot have federal loans, accept advantage of the automatic forbearance that's in effect through Jan. 31, 2022, due to COVID-xix. Put your loan payments toward credit cards and private pupil loans that are nonetheless accruing interest.

Even if you don't have other debt, consider putting the amount you'd currently be spending on federal student loans into a savings account. Since your loans aren't accruing interest during this automatic forbearance menstruum, it makes sense to hold off on paying them. It'due south too possible that cancellation of some federal pupil debt will eventually occur.

Upkeep for health insurance

If you're however on a parent'south wellness plan nether the Affordable Care Human action, consider yourself warned. You demand to budget for and obtain your ain coverage past historic period 26. Showtime planning for the actress expense now by shopping for an affordable healthcare program or applying for jobs with companies that offer health insurance.

When you lot don't have health insurance, one unexpected trip to the ER can drain your savings and leave yous with significant debt. If only for financial reasons, don't even consider going without health insurance coverage.

Collect your employer's 401(k) friction match

1 of the fastest ways to build retirement savings is to take advantage of a company 401(thou) match if your employer offers one. Even if your employer only matches 25% or fifty% of your contribution, that's nevertheless substantially a 25% or 50% return on your investment for the year.

Even if your employer doesn't lucifer your contributions, or you're cocky-employed, make every endeavor to invest for your retirement. An private retirement account such as a Roth IRA is a practiced choice since withdrawals in retirement, when your taxation bracket is likely higher, are not considered income. The money likewise grows taxation-free in your IRA until it is withdrawn.

Take on a side hustle

If you're serious about upping your savings game, or have a big goal like achieving financial independence and retiring early, then you might non want to look around for pay raises from your employer. A side hustle, which can exist annihilation that generates extra cash, is a great style to increase your savings.

A side hustle may non be doable for everyone, but if you tin can spare the actress time, it's definitely financially worth it, especially when you are immature. The younger you are, the more powerful the furnishings of compound involvement are on the value of your portfolio.

Salvage more equally yous earn more

Even if yous're not making the big bucks now, the best thing you can do to make sure your savings rate increases with time is to start planning today for when yous make more money. Continue your expenses depression and decide what'due south most important to yous.

Equally your income increases, it's OK if your expenses rise, too. Your costs only need to increase at a slower stride than your income. Prepare a goal of saving a certain and increasing percentage of your pay with every heighten you get. If you can alive below your ways and avoid lifestyle inflation, so you are well-positioned to brand your savings rest soar.

Expert Q&A

The Motley Fool caught upwardly with retirement expert David John, a senior strategic policy advisor at the AARP Public Policy Institute.

David C. John, MA, MBA, AARP Senior Policy Advisor

David C. John, MA, MBA, AARP Senior Policy Counselor. David'southward areas of focus are retirement savings, pensions, annuities, international pension and retirement savings systems, and PBGC.

The Motley Fool: In 2019, the average retirement account savings for American households was $65,000 with the average American under 35 having $13,000 saved for retirement. Why practice yous think this average is so much lower than what experts typically look Americans to accept?

David John: The curt answer is access, participation and portability. Far too many Americans are non offered a payroll deduction retirement savings account at work. That is the most successful way to save for retirement. And far too many retirement plans don't use automated enrollment and escalation, the most successful way to heave participation and ensure that people are saving enough. Finally, it is too difficult to move retirement savings from job to job, so many people just cash out their accounts when they leave an employer.