At CNNMoney, Walter Updegrave hosts an “Ask the Expert” column in which he fields reader questions. (Updegrave is an editor at Money Magazine.) Lionel from San Diego recently wrote in with a question that all of us have:

What percentage of income should someone save in order to be considered financially responsible? I’m wary of spending now because of the bad economy, but I don’t know how much I should be saving on a monthly basis.

This is a great question, and something I’ve wrestled with over the past year or two. Ultimately, I decided to embrace Elizabeth Warren’s balanced money formula, which says to set aside at least 20% of after-tax income for Savings, keep Needs below 50%, and use the rest for Wants:

In other words, my target savings rate is 20% of my income. My wife tries to save 25% of her income. We’ve structured our lives to make this possible.We rectify our purchasing errors by understanding our credit report but what does money expert Walter Updegrave recommend? First he notes that Americans aren’t exactly savers:

When it comes to socking away bucks for retirement, the National Foundation for Credit Counseling’s 2009 financial literacy survey also shows we’re not exactly knocking ourselves out. About a third of those polled said they put away nada for retirement, another third save 1% to 10% and just under a quarter save more than 10%. (The rest said they didn’t know how much they set aside or refused to answer.)

But then Updegrave gives a great answer, which boils down to: Do what works for you. There is no right answer to this question. Each of us is in a different situation, and while it might be financially responsible for me to save 20% of my income, for you that number might only be 5%.

Updegrave says that it’s not important what percentage of your income you save, but that you develop the habit. Build an emergency fund. Develop a retirement savings regimen. When you’ve done these two things, look for a additional ways to save. Most of all, he says, don’t make excuses. We all have things we’d rather spend our money on; if your goal is to be financially responsible, make saving a priority.

Note: Flexo at Consumerism Commentary recently wrote about Updegrave’s advice as well.

[CNNMoney: 3 steps to financial security: Save, save, save]

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