This Is How Much Money You Should Have in Savings by 25. How Do You Compare?

Saving money is a tough thing to do in general. But when you're in your 20s, it can be a real challenge.

Some people are fortunate enough to snag a high-paying job right out of college. But many graduates spend a good part of their 20s earning entry-level salaries and struggling with bills. If you're in that boat, then you may not have that much cash socked away by your 25th birthday. 

But just how much savings should you have by 25? Ideally, by then, you should have a solid emergency fund and the start of a nest egg. But if you don't, that's okay, too.

Aim for a three-month emergency fund

If you're 25, you may have modest expenses like a rental you share with a roommate, a cheap car, and so forth. But it's still important to have a way to pay those bills in the absence of a paycheck, such as if you were to lose your job or be forced to go out on disability due to an injury.

That's why it's important to have a three-month emergency fund by age 25. If you have enough cash to cover three months of essential expenses, you may be less likely to resort to credit card debt when an unplanned bill or period of unemployment arises. And you might also be in a strong position to cover a larger expense like a car repair.

Aim for one-third to half a year's salary in retirement savings 

Retirement is a period of life you should try to save for from a young age. The more time you give your savings to grow, the easier it becomes to build up a larger nest egg. 

Fidelity says that by age 30, you should optimally have the equivalent of a year's salary (meaning your salary) in an IRA or 401(k) plan. So by 25, it's good to aim for somewhere between one-third of a year of pay and one-half. 

But remember, even if you start funding an IRA or 401(k) at age 21 or 22 upon graduating college, you're not so far off from 25. And that means you're not getting a very large window of time for your money to grow. So don't get down on yourself if you only have enough of an IRA or 401(k) balance to equal a month or two of your current salary by 25.

A side gig could be your ticket to boosted savings

When you're in your mid-30s and you've worked your way up the ranks within your industry, it may be a lot easier to build savings. But it's hard to do the same in your early- to mid-20s. If you don't have a three-month emergency fund or one-third to one-half of a year's pay in retirement savings, do not beat yourself up. It's an accomplishment to have savings at all at that point, so pat yourself on the back if your balance isn't $0.

That said, one way to give your savings (emergency and retirement) a nice boost is to take advantage of the gig economy. You may not have enough experience to get promoted at your main job and snag a higher salary. But if you're able to supplement your income for a few years by doing things like pet-sitting or driving for a rideshare service, you can use that extra cash to build savings. And then, once your salary picks up, you can dump your side gig if it's too time-consuming or you're just plain tired of it.

Many people don't have any savings at 25. So try not to get too hung up on ideal targets. A better bet is really to just do your best to save as much as you can, and to celebrate small milestones in your savings and retirement accounts along the way.