Savings rate and time to financial independence (FIRE) According to the Federal Reserve Bank of St Louis, the personal savings rate across the USA was about 14.3% as of September 2020.
While you should strive to maintain as high a savings rate as possible, you should still allow yourself to spend enough to enjoy life. At a minimum, you should aim to have a savings rate of 20%. What is a "good" savings rate depends highly on your individual situation and how much you are able to save. What is a good savings rate?Īs a rule, the higher your savings rate, the faster that you can achieve financial independence. Simply input your monthly take-home pay and monthly spending.
This interactive calculator makes it easy to calculate and visualize your personal savings rate. To convert this SR to a percentage, multiply by 100. Thus your SR = (Income after tax - spending) / (Income after tax). Your savings over any period is your income - expenses. Savings Rate (SR) is defined as the ratio of savings divided by your income. On the other hand, a savings rate of 100% means that you save all of your income and spend none of your income. A savings rate of 0% means that you spend all of your income and save none of your income. The higher your savings rate, the stronger your personal financial situation. Your disposable income should be used to calculate savings rate and this is your total income after all income taxes. It is the ratio of your personal savings divided by disposable income over a given period and is typically written as a percentage. Your personal savings rate is a measure of how much of your personal disposable income is saved rather than spent.
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