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Originally posted by userind
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The tough part will be teaching yourself to set aside 20% of gross before you pay any bills. But once this habit is started, you will not even think about it.
And when you get raises because things like 401ks are based on percentage of salary, you will already be sending the correct percentage to savings (and then you can spend the raises).
Many people making around 30k would suggest 6k is too much to save (6k is 20% of 30k). They will save "when they get a raise". The problem then becomes if a person was saving only 5% of 30k ($1500), and they get a 3k raise (10% raise), they don't increase their savings from 5% to 15% to make sure they captured the whole raise in savings (15% of 33k is $4950) so in the end the entire raise would need to be saved and then some to reach the given goal.
If you can save 20% of a low salary, saving 20% of a higher salary is EASY. I keep getting raises (3 times I have received 2 raises per year over last decade) and I don't need to worry if I am saving enough because my savings is always based on percentage of salary, and my savings was high enough when I did not earn much (in 11 years my salary doubled).
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