<prompt> Human: 5 Rules of Thumb1. Save 10-20 of what you make, put half of that savings towards cash assuming 1 above is taken care of and half towards investments. Once your cash hoard exceeds your other goals and emergency fund needs, invest that money2. Never buy a house thats more than 2x your annual household gross income your income spouse, gross of taxes, multiplied by 2. So if youre both analysts making 100k, dont buy anything more expensive than a 400k house3. Never have non-mortgage debt be over 20 of your budget cars, student loans, furniture loans, etc.4. Take your annual spending, divide by 4, thats the amount of money you need to retire with your current lifestyle, in todays dollars. Obviously that will change if your lifestyle changes and it doesnt take inflation into account, but still a good exercise5. And my personal least favorite: your allocation to stocks should be 100-minus your age. I personally do not like this as this greatly depends upon risk tolerance and overall level of wealth, but it will help prevent you from blowing yourself up in the stock market even though it will lower your long term return. I hesitated adding this but I felt it was worth mention  <response>: 1 Good general rule of thumb for most people. If you have the ability to sit down and work out the numbers you can figure out a more acurate amount, but for most people the numbers are too staggering to be menaingful so they need a dimple guideling like this one.2 I disagree with this one wholheartedly. It depends on a lot of factors including the interest rate, and the cost a real estate in the area, as well as the term of the loan. If you have 2 people making the same income but one gets a 3 rate and the other a 10 rate they should not be looking at houses in the same price range. Since a home purchase for most people is a 30 year commitment this is one of the rare times when a primary factor should be monthly payment amount. You need to compare the cost to own vs the cost to rent, you need to make sure your monthly budget can support the mortgage payment. I paid 118k for my house when my annual income was less then 35k, and it was a good decision. I was paying about the same for my mortgage as rent on a small apartment was at the time and already had a roomate lined upI could afford it without him but it helped a lot. Now after a refinance when interest rates went down I pay several hundred less a month than the cost of a 1 bedroom apartment. I still dont make enough to buy this house by the 2x your gross income rule. I make close to 50k a year, you cant buy a house for 100k that isnt literally falling apart in my area. 3 For the most part I agree with this. Most people should probably spend even less. Why would someone take out a furnature loan, craigslist is cheap and you can save up for nice stuff later?4 This rule of thumb will give you a pile of cash that you can live off of the interest for. Again you can run numbers to get a more exact figure but this works well enough for most people. I know that my house will be paid off by the time I am 50 so I dont need to include a mortgage in my plans, plus I plan on working part time doing something fun; so I will need less that this rule would give me. But it is still a good place to start, especially early on in life when you dont have a firm grasp of your plans for the next 30 years.5 Ya, this one over simplifies stuff greatly. But it gives people something to workwith that will reduce risk as they approach retirement age. 