Wednesday, February 1, 2023
Market-Reporter
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate
No Result
View All Result
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate
No Result
View All Result
Market-Reporter
No Result
View All Result
Home Retirement

Savings rate formula will show you if you’re on track to retire early

MtR by MtR
June 8, 2021
in Retirement
0
Savings rate formula will show you if you’re on track to retire early


This story is part of CNBC Make It’s One-Minute Money Hacks series, which provides easy, straightforward tips and tricks to help you understand your finances and take control of your money.

If you have a big money goal in mind, such as buying a home or retiring early, you should have a solid understanding of where your money is going, including how much you’re actually saving.

An easy way to figure out how much of your money can go toward building wealth is by calculating your savings rate, which is the percentage of your income that you keep each month, versus the amount that you spend. 

It shows you how much of your income is left over after expenses — money that you could be putting to work. 

But before you can calculate your savings rate, you’ll need to gather a few numbers.

First, determine the amount you bring in each month, including your take-home pay from any full- or part-time work, plus any additional cash you earn from side gigs.

Next, figure out how much you spend. This should include any expenses that aren’t automatically taken out of your paycheck, such as your mortgage payment and student loans. You should also include any discretionary spending, such as dining out, travel and streaming services. 

Now, you can plug it into the savings rate formula. Here are the steps:

  1. Subtract your expenses from your income.
  2. Divide that number by your income.
  3. Multiply by 100.

Say you earn $3,000 a month from your 9-5, $500 from your side gig, and your expenses add up to $2,500. 

Your total income — $3,500 — minus your expenses comes to $1,000. When you divide that by $3,500, you get 0.2857. 

Multiply that by 100 and your savings rate is approximately 28.6%. 

Keep in mind that this is a simplified version of this calculation. If you contribute to a retirement fund pre-tax, earn an employer match or already figure other savings into your monthly expenses, you’ll need to account for those as well.

If you earn an employer match, for example, you can add that amount to your monthly income since it’s part of the compensation you recieve from your employer. You can also add any pre-tax contributions you make to a retirement account to your income if you want to see the total amount you’re saving, rather than the just the amount of your take-home pay that’s left after covering your monthly costs.

It may also be helpful to use an online calculator that does the math for you.

Knowing how much you’re currently saving gives you a starting point to calculate how close you are to reaching certain goals and how long it will take you accomplish them. If you’re aiming to put away enough to retire in the next 20 years, you can estimate how much you’ll have based on your current savings rate and understand if that’s actually a reasonable goal.

You may also realize that you’re burning through your earnings more quickly than you would like. If that’s the case, you may want to look for ways you can trim your expenses.

Keep in mind that when your income or expenses flucuate, your savings rate will too. It’s worth recalculating any time you earn a raise or adjust your budget to make sure you’re still on track to reach your goals.

Check out: Meet the middle-aged millennial: Homeowner, debt-burdened and turning 40

More from this series:



Source link

Related articles

How to 10X Your Retirement Savings While Barely Lifting a Finger

August 10, 2022

Australian government scraps COVIDSafe app, Serena Williams teases her retirement, and a dire new sea ice record — as it happened – ABC News

August 10, 2022

Related Posts

How to 10X Your Retirement Savings While Barely Lifting a Finger

by MtR
August 10, 2022
0

Saving for retirement isn't easy, especially during tough economic times. With a recession potentially on the horizon, many workers are...

Australian government scraps COVIDSafe app, Serena Williams teases her retirement, and a dire new sea ice record — as it happened – ABC News

by MtR
August 10, 2022
0

Australian government scraps COVIDSafe app, Serena Williams teases her retirement, and a dire new sea ice record — as it...

Former Muskogee Firefighter Visits Department 41 Years After Retirement

by MtR
August 9, 2022
0

A 95-year-old former Muskogee firefighter was invited back to the Muskogee fire department today, 41 years after retiring.The trip was...

Serena Williams says ‘countdown’ to retirement has started

by MtR
August 9, 2022
0

Issued on: 09/08/2022 - 19:48Modified: 09/08/2022 - 19:46 Toronto (Canada) (AFP) – Serena Williams, a 23-time Grand Slam champion and...

Former Detroit Lions offensive lineman announces retirement after 7 seasons

by MtR
August 9, 2022
0

ALLEN PARK -- Kenny Wiggins, who played on the offensive line for the Detroit Lions across three seasons, announced his...

Load More
  • Trending
  • Comments
  • Latest

Bank of England tells ministers to intervene on digital currency ‘programming’

June 21, 2021

Tips for checking smoke alarms during daylight saving time

March 12, 2022

GLOBAL MARKETS-U.S. stocks follow Europe up; Treasury yields rise, dollar firm

July 9, 2021

What will Durham County education bonds pay for? A full list

July 8, 2022
African currencies week ahead: Zambia's kwacha seen on back foot, Kenyan shilling up – Business Recorder

African currencies week ahead: Zambia's kwacha seen on back foot, Kenyan shilling up – Business Recorder

0
Maxum Foods releases Global Dairy Commodity Update for June

Maxum Foods releases Global Dairy Commodity Update for June

0
Letter: Perpetual bonds can help states fight hunger

Letter: Perpetual bonds can help states fight hunger

0
United Kingdom ETFs Are Riding the Re-Opening Momentum

United Kingdom ETFs Are Riding the Re-Opening Momentum

0

Investment in overseas real estate surges : The DONG-A ILBO

August 11, 2022

U.S. inflation CPI report, Wall Street, currencies

August 10, 2022

Alberta oil production set new record in first half of 2022

August 10, 2022

Industrial Lubricants Market to Reach $71 Billion by 2027.

August 10, 2022

Recent News

Investment in overseas real estate surges : The DONG-A ILBO

August 11, 2022

U.S. inflation CPI report, Wall Street, currencies

August 10, 2022

Alberta oil production set new record in first half of 2022

August 10, 2022

Categories

  • Asia
  • Bonds
  • Canada
  • Commodities
  • Cryptocurrencies
  • Currencies
  • Emerging Markets
  • ETFs
  • Europe & Middle East
  • IPOs
  • Latin America
  • Mutual Funds
  • Personal Finance
  • Real Estate
  • Retirement
  • Spending & Saving
  • Stocks
  • U.S. Markets
  • Privacy & Policy
  • About Us
  • Contact Us
  • Advertise with us

© 2021 Copyright Market-Reporter

No Result
View All Result
  • Home
  • Markets
    • U.S. Markets
    • Canada
    • Europe & Middle East
    • Emerging Markets
    • Asia
    • Latin America
  • Investing
    • Stocks
    • IPOs
    • Mutual Funds
    • ETFs
    • Bonds
    • Commodities
    • Currencies
    • Cryptocurrencies
  • Economy & Politics
    • Personal Finance
    • Spending & Saving
    • Retirement
    • Real Estate

© 2021 Copyright Market-Reporter