Friday, July 10, 2015

2014 Personal Savings Rate

It's always interesting when I read other blogs and see the discussions with people about their personal savings rate.  For those out there that achieve 70% or high is astounding and really is a testament to their frugality and dedication to their willpower to not get lost in keeping up with their neighbors.  I especially like Dividend Mantra's journey and his incredible 64.5% savings rate for the month of May.  I haven't seen another update from him on June, but I'm sure with his crazy amount of purchases that he did quite fine last month as well.

In the spirit of the rest of us savers and seekers of financial independence I'm going to keep a regular cadence of my savings.  Before I break it down and get into the numbers I want to explain how I'm calculating my savings.  I spend approximately $1350 on my mortgage each month and pay an extra $100 towards the principle each mortgage period.  I will not include this in my savings rate as to me it is an expense that I have to pay.  I guess I could not pay it, but something tells me that Chase and I would have a rather unpleasant conversation.  I explain this as I have seen it included in people's financial savings rate and, while it does have some merit as you technically are saving interest, it's still a mandatory expense until you pay off the house.

So  how did I do in 2014?  I'm going to break it down in two ways to see what I'm saving comparing full salary and my take home pay.  Before we do that though we need to know what the average US savings rate is to see if I'm really doing any good.  Referencing ycharts for the savings rate we see a breakdown for the last five years and currently we have a national average of 5.1%.  That's pretty abysmal and it's no wonder we're looking at a retirement "crisis" in the near future.  I put parentheses up because everything nowadays is a crisis or disaster, pretty sure when I was a kid things just happened instead of being sensationalized.

Looking at comparing it to my full salary to my savings last year I saved 34.65% of my gross income.  That's a pretty solid number almost 30% higher than the average American.  Digging even deeper into it when I pull out an base it solely on my take home, meaning after taxes) I socked away 39.90% of my take home pay.  I set a goal for 2015 to save 40% and I almost accomplished it last year without really even knowing.  I really like having a goal in place as I did not have one in 2014.  I tried to sock away money with no regard to really understanding what I was going for.  Now that I've got a goal I have something to work towards.

How about you?  What are your savings rate goal and achievements.

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