How Much of Your Income Can You Save?
17 November 2006I’d never have guessed it, but this couple managed sixty percent - of their GROSS income. And that income is only $48,000. It sounds pretty extreme to me - I think most people ridiculously overspend, but they might be oversaving. You’ve got to have some fun while you’re younger, too - just as long as you don’t use that as a rationalization to do whatever you want, whenever you want, regardless of the consequences. What would be the ideal percentage of your income to save? My guess is that about 10% of your gross income puts you in the safe zone, 15% is a better (but more aggressive) goal. That’s assuming you start when you’re relatively young - but that couple is in their mid-thirties, and frankly don’t have to go that far unless they really want to. The one major upside is that he’ll probably be able to retire pretty early. That might be worth it, especially if you’re the kind of person who doesn’t get much pleasure out of stuff or travel or most of the other luxuries people spend money on. For most people, though, I’d recommend trying to find a happy medium rather than going overboard.
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2 Responses to “How Much of Your Income Can You Save?”
November 18th, 2006 at 11:09 am
It’s pretty hard to get to financial freedom very soon by saving only 10-15%…
November 18th, 2006 at 9:15 pm
True - but I don’t think most people are planning on doing it in a few years. It’s realistically going to take 15-20 years at a minimum - you can try to speed it up, but you have to make a lot of sacrifices to do so. Trying to save 60% is something I don’t think is feasible in most cases, and not really necessary unless you just started trying to save for retirement in your late 50’s.