Since I started on my financial independence journey I am actively monitoring the amount of money I am saving.
The PF / FI blogs outline a number of ways to calculate “savings rate”. Firestarter has summarised these. I am calculating these using my take home earnings as it keeps things simple for me. My take home earnings are deducted for
– income tax
– national insurance
– pensions (via employer scheme)
The June savings come to 62% of my take home money. This is the maximum I have saved since I have started measuring these since February this year. The savings included
– regular payments to tax efficient ISA (cash and shares)
– one off share buy (probably an impulsive buy)
– a small regular payment to a fund
– £100 to the emergency/ rainy day fund
I am very happy with 62% however August to Dec are normally expensive months for me because of
– professional memberships / insurances renewals (must for my work)
– car / travel insurance renewals
– my other half’s birthday
– Christmas
I cannot do much about the first one but I must look at the other three and ensure that I keep my savings rates to a good level.
thefirestartercouk said:
Hi!
Got a track back on the link you posted (thanks for that!) so thought I’d pop over and see how it’s going. 62% is awesome!
As I alluded to in my article you should really count the pension savings into your savings rate. I mean you don’t have to, it’s up to you how you track it, but if you want to use the savings rate and plug it into the “How long until I hit FI” graph or calculators out there then you want to be calculating all savings including pretax pension contributions. If you don’t care about that though then calculate it however you wish of course 🙂
Cheers
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