RE: On The Importance of Saving At Least 10% of Your Income

Saving 10% of net earnings is absolutely excellent advice and wisdom. If that's not possible due to extraordinary circumstances (such as unemployment or emergency expenses leading to huge debts), still make the effort with whatever can be spared. Paying rent is more important than making a student loan payment.

The 10% can be used first to establish a Rainy Day Fund or an emergency savings account. This is money set aside for emergencies and unexpected expenses. Six months of earnings is the minimum to have in the Rainy Day Fund. After that, the 10% can be re-routed to things such as saving capital for business or saving for a major purchase such as a car.

Whether it's for an emergency or for upgrading our circumstances, saving 10% of net earnings is a must.

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