Financial advisors always say you should pay yourself first. It sounds confusing, since you’re the one who’s getting paid in the first place, but what they mean is that savings should come first, so establish your cash reserves in case of an emergency or unexpected job loss.
According to Liola, a person’s cash reserves should equal three months of total expenses. That includes committed expenses like bills and discretionary expenses like what you spend on shopping each month.
You should ultimately aim to save $10,000 to $15,000. That might seem like an intimidating amount, but as long as you aim to achieve that in two to three years, you’re on the right track, Liola says.