What percentage of income is recommended to save?

• A. 10%
• B. 20%
• C. 30%
• D. 25%

Answer: (B)

Saving about one-fifth of your income is a widely used guideline because it creates a practical balance between what you need today and what you set aside for tomorrow. Setting aside this share helps you build an emergency fund, which protects you from unexpected bills, and it also accelerates retirement savings through ongoing contributions. It fits nicely with the common budgeting framework that splits income into needs, wants, and savings, giving you a clear target that you can start with and adjust as your situation changes. If you save less than this, it can take longer to build a sufficient safety net or retirement nest egg; saving more is great if your budget allows, but one-fifth is a sensible, achievable starting point for most people.