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I'm curious to see how well people save their money in this economy. As many of you know, the US has traditionally had a very poor savings rate. We fuel our economy through rampant consumption. In fact, consumer consumptions accounts for approximately $10 trillion worth of GDP every year! That's a lot of moolah!
So that got me thinking. The average American saves about 3%. That's pretty dismal. I keep a budget like many of you. However, that doesn't tell the story in and of itself. What really matters is the percentage of your gross pay you're saving. That's the true measure of one's frugality / ability to save / whatever euphemism you want to call "saving ability".
So do me a favor. Take out your calculator.
Punch in the following: Amount Saved Per Month
Gross Pay Per Month
Remember to use gross pay and not net pay.
My results: 64.5% Yup, I've got just about 0 expenses since my company pays for literally everything.
The reason why I think this is an extremely important metric is because it measure how well one lives within one's means. Project yourself 10 years down the line. You may potentially be making twice your current income. If you expenses stay relatively fixed, you're going to be saving a LOT more than twice what you save now.
Please define gross pay? Is this before taxes or after taxes. Does savings include 401K contributions.
I save 14% of before tax pay towards 401K. I am taxed about 30% of my pay and save maybe 50% of whats left over. So in total my savings rate of before tax income is about 40%.
Well, your skepticism is well founded. My own parents have a hard time believing my savings rate so I take no offense to your questions.
You're also 100% correct on my compensation figure. However, please keep in mind that I don't pay for an apartment, car, cell phone, utilities, public transportation, gas, dinner (provided by work 6 days a week). As I said, all my expenses are covered by work. Then again, I put in approximately 100 hours a week at work, so I'd say it's an equitable trade off. And no, I'm not a Banker. My line of work involves a lot of expenses that I can use as deductions and credits on my taxes.
My hobbies include the outdoors, hiking (I've visited 24 of the 58 US National Parks in the past two years for a total of $160 - 2 America the Beautiful passes!), reading, traveling (which my company pays for as well). Well, they pay for the airfare. I couch surf and hostel it and spend nights at the airport when I get to my destination. My most expensive possessions are my used Canon EOS DSLR and my used kayak that I bought at an REI used gear sale a couple of years ago. I own nothing else that's remotely expensive.
Also, I don't have a gf currently and don't indulge in anything expensive. I wasn't well off too long ago - in fact daily survival was an issue, and those lessons in frugality which I learned to survive haven't worn off.
Lastly, the student loan pay off has nothing to do with how much I save. I used saved up money to pay it off. I've still saved approximately 60% of my gross monthly income every single month for 8 of the past 9 months.
If you'd like further proof, sue me for something that requires me to retain an attorney, then work with him to get my financials
EDIT: If you take into account stock market gains, my savings rate is significantly higher.
I had to laugh when I read this, you are full of crap! If you work 100 hours per week, or about 14 hours per day I'm guessing you don't have time for much hiking. Unless you are a forest ranger.
As I said, all my expenses are covered by work. Then again, I put in approximately 100 hours a week at work, so I'd say it's an equitable trade off. And no, I'm not a Banker. My line of work involves a lot of expenses that I can use as deductions and credits on my taxes.
Are you saying you are getting your expenses paid for by work AND claiming them on your taxes?
Without actually doing the math of gross VS. net, I put 5% of my gross into my 403B. My employer matches with 11% of my gross. I save about 10% of my net in savings accounts, and another 5% or so goes into my Roth IRA or Full life insurance policy.
I had to laugh when I read this, you are full of crap! If you work 100 hours per week, or about 14 hours per day I'm guessing you don't have time for much hiking. Unless you are a forest ranger.
Well, my US National Park Passport book is running out of pages, so either I'm lying or the park rangers who stamped it are? Working remotely is a reality in this world. And with my job, I'm never in one place. Hence, the travel aspect which I've constantly alluded to in my posting history.
EDIT: Just came back from a hike at the Great Smoky Mountain National Park. Unfortunately not NP #25 since it's a repeat visit, but perfect day for hiking.
Please define gross pay? Is this before taxes or after taxes. Does savings include 401K contributions.
I save 14% of before tax pay towards 401K. I am taxed about 30% of my pay and save maybe 50% of whats left over. So in total my savings rate of before tax income is about 40%.
Yup, gross pay is prior to any taxes. It's your straight line annual salary divided by 12. 40% is exceptional, sort of the magic number, according to many personal savings 'gurus'. When I first started my job that was my target.
I had to laugh when I read this, you are full of crap! If you work 100 hours per week, or about 14 hours per day I'm guessing you don't have time for much hiking. Unless you are a forest ranger.
ever wonder where a forest ranger goes when he wants to get away from it all? ha ha
54% including 401k contributions
83% after taxes...
I hate taxes!
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