GLOSSARY · FIRE & EARLY RETIREMENT

Savings rate

The share of your income you save. For planning financial independence it is usually measured after tax, as savings divided by savings plus spending, because spending sets both your target and how much is left to invest.

Also called: saving rate, percent saved

FORMULA

Savings rate = yearly savings ÷ (yearly savings + yearly spending)

COMPUTE IT WITH YOUR NUMBERS

Savings Rate Optimizer →What is my savings rate and how many years to FI at this rate?FIRE Calculator →Given savings and spending, when can I stop working?

LEARN IT PROPERLY

CHAPTER · BUDGETING METHODS & FUNDAMENTALS · FOUNDATIONSWhy Budgets Fail and How to Build One That Lasts CHAPTER · BUDGETING METHODS & FUNDAMENTALS · FOUNDATIONSBuilding the Structure: Take-Home Pay, Order and Accounts

SOURCES

Personal Saving Rate (PSAVERT). U.S. Bureau of Economic Analysis, via FRED.

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