Question

I just want to know if my answer is correct

What is a good “rule of thumb” for how much you should save?

20% of income

50% of income

80% of income

70% of income

I choose 50% of income

Answer 1

The correct answer is letter "A": 20% of income.

Step-by-step explanation:

The percentage of savings of people will directly depend on their income. Employees earning the minimum wage are likely to use the most of their salary paying bills which will give them few to no opportunity for saving. On the other hand, executives with annual income above the average have more chances to save a good percentage of the money they receive monthly according to their expenses.

However, for a person who receives an average salary that allows covering expenditure and having some free money a bank account, at least should be saving 20% of that income. Besides, according to the 50/20/30 budget rule, 50% of the salary should be spent on needs, 30% on wants, and 20% on savings.