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Advice

Experts say you should have the equivalent of your annual salary saved by age 30—here's how to do it

CNBC Select offers four tips on how to save 1 times your income by the time you turn 30.

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Retirement may seem far away when you're not yet 30, but it's never too early to start saving for your future.

If you want to retire by age 67, experts at retirement-plan provider Fidelity Investments suggest having one times your income — or the equivalent of your annual salary — saved by the time you turn 30.

For example, if you earn $40,508 per year (the average yearly earnings of a 20- to 34-year-old according to Q2 2020 data from the Bureau of Labor Statistics), this means having $40,508 saved by your 30th birthday.

While this guideline may seem daunting at first, CNBC Select has some advice to get started saving.

If you are in your 20s, or even if you reached 30 and don't have the equivalent of your salary stockpiled somewhere, the below four tips can help you begin your saving journey.

1. Automate your savings

Sallie Krawcheck, co-founder and CEO of the digital investment platform Ellevest, says her best advice for this cohort of future savers is to automate their savings by setting up direct deposit.

Making this a habit every month can help you streamline your finances so you don't have to spend time remembering to save. When you schedule direct deposit, a certain amount of money from your checking account or paycheck will automatically transfer into your savings account.

Krawcheck's recommendation also keeps you from spending money when it otherwise could have been saved.

Learn more: How much cash should you keep in your savings and checking account? A financial planner weighs in

2. Open a high-yield savings account

Another facet of automating is finding ways for your money to grow without extra work. You may want to consider a high-yield savings account that earns a higher return than the national 0.05 interest rate on traditional savings accounts.

Even though interest rates on savings accounts have dropped considerably amid the economic fallout from the coronavirus pandemic, your savings might as well sit in an account earning you more than the national average, especially if it comes at no additional cost to you.

Learn more: 4 reasons why it’s smart to put money in a high-yield savings account even when rates are low

The best high-yield savings accounts are online, offer zero monthly maintenance fees, no minimum deposits to open and no minimum balance required to start earning interest.

Both Ally Online Savings Account and Synchrony Bank High Yield Savings meet this criteria. Plus, Ally Bank offers a checking account if you want to do all your banking in one place.

Ally Bank Online Savings Account

Ally Bank Online Savings Account
On Ally Bank's secure site
  • Annual Percentage Yield (APY)

    0.60%

  • Minimum balance

    None

  • Monthly fee

    None

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

  • Excessive transactions fee

    $10 per transaction

  • Overdraft fees

    $25

  • Offer checking account?

    Yes

  • Offer ATM card?

    Yes, if have an Ally checking account

Terms apply.

And if you don't need a checking account, but would like an ATM card with easy access to your cash, Synchrony Bank may be a good choice.

Synchrony Bank High Yield Savings

Synchrony Bank High Yield Savings
Information about the Synchrony Bank High Yield Savings has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Synchrony Bank is a Member FDIC.
  • Annual Percentage Yield (APY)

    0.60%

  • Minimum balance

    None

  • Monthly fee

    None

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

  • Excessive transactions fee

    None, but may result in account closure

  • Overdraft fees

    N/A

  • Offer checking account?

    No

  • Offer ATM card?

    Yes

Terms apply.

Remember that any windfalls of cash are perfect opportunities to add more to your savings. Consider depositing all or a portion of things like yearly bonuses and tax returns. They may seem small amounts of money, but they certainly add up over time.

3. Keep your expenses low

So you have enough cash to deposit into your high-yield savings account, it's important to maintain low cash outflow.

Start by creating a budget to see where every dollar of your money goes each month. You may realize some easy expenses to cut back on, like canceling any unused subscriptions, memberships or streaming services. If you're starting to ease out of working remotely and are returning to the office, consider how much your commute and eating out can cost you.

And as you progress in your career and your income increases, continue to live on your older budget so that you save the difference in earnings.

4. Invest in your 401(k)

When you land your first full-time job in your 20s, start putting a percentage of your salary into your 401(k) retirement account. How much you contribute varies depending on your salary and your cost of living, but you'll want to make sure to match any company contributions.

For example, if your employer matches 100% of the first 6% you contribute, make sure you contribute at 6%, too. Otherwise you're leaving money on the table. If you can't afford the employer match at first, start small. You can work on increasing your contributions by 1% every quarter or every year.

Over time, your money in the account will grow thanks to compound interest, which is essentially interest earned on interest.

And if your employer doesn't offer a 401(k)-sponsored plan, consider putting money away in individual retirement accounts like a traditional or Roth IRA.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.