'06 Arctic

Including my IRA's, 401K, and personal savings, I save about 17.5% of my take home pay. I went a little crazy this year with my CC and got behind on paying off my balance each month. Once i get these paid off, that is going to jump back up above 20%.

sporting

Seems most of us save around 20-30% take home pay. Seems like a small percentage, but at least it is savings ++ rather than --.

moeronn

Saving 20-30% of your take home pay is pretty darn good. It may not seem like it the first year or two, but in a few years, you have a full year's worth of savings. That is something very few people can say.

yunginTL

$1500 for my Individual Roth 401k and $500 I add to my "fuck you" fund

sporting

Bump, so has people savings rate changed since 2-3 yrs. ago? Luckily my savings has gone up since I got married now! 2 Income ftw.

juniorbean

iTrader: (5)

Without getting into specific numbers... my salary (after taxes, benefits, 401k, etc) covers the mortgage (includes tax and insurance and we pay a couple hundred extra to principal), utilities, and the small car payment (have to build credit) on my wife's car and I'm still able to save about 10% or so per month. That means my wife's salary is pure savings/discretionary income.

Works out well

dmikon

The absolute number that you save per month does not mean anything. For example, suppose I save $10,000 a month - am I saving a lot? What if my income is $10M a year? Is a savings rate of 1.2% good?

The key thing is what your financial goals are. The typical metric of saving 10-15% for retirement is based on many assumptions: you will retire around 65, you want to replace about 80% of your income, and the investments will return 8-10%. The problem is, what if your goal is to retire at 55? What if your goal is to retire with 100% (or more) of your pre-retirement income? What if you don't want to assume the markets will be good and want to aim for a more conservative nominal return, like 6-7%? All this greatly affects what your savings rate should be.

One more thing to consider, a lot of the retirement calculators ask how much of your pre-retirement salary you want to have in retirement. I think that's not the right approach. The right approach, in my opinion, should be how much spending you want in retirement. If you project an income of $40,000 a year in retirement, it doesn't matter whether this is 50% of your income, or 90%, the number should be your goal, not some random percentage.

That said, I will advice the following for the best chances of success:

1. Start young.
2. Have a long term plan.
3. Stick to the plan (i.e. ignore the BS/noise from TV/media/"experts")
4. Assume less than optimal market conditions and retirement landscape. Read: don't create a retirement plan hoping for 15% yearly returns and low taxes when you retire.
5. Live below your means. This really should be #1. It doesn't matter how great your investments are if you don't have money to put into them.
6. Don't spend then figure out how much you can save. Instead, look at point #2, and save what is necessary. Then you can spend the rest. As is often said, pay yourself first.
7. Don't chase performance. It is better to have good returns with small chances of big losses, then to shoot for the stars while risking ending up in the poor house. Key point: invest in low cost index funds. Long term you will do better than 80% of all investors, professional and amateur alike.

"A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money" -Warren Buffet

svtmike

Mine hasn't. I've got it all set up to happen automagically.

NSXNEXT

iTrader: (2)

I think the term "save" means a lot of things.

Here is how I break out my savings:
1) save for retirement 401K, Roth & Traditional IRAs
2) save for kid's education
3) save in emergency funds account
4) save for house projects
5) save in car fund

I worry more about what I spend each month. Anything else is some form of savings.

SharksBreath

iTrader: (33)

it's not much but my girlfriend and i share a joint saving account and we each put in $150 a week from our paycheck. it add's up quick if you can resist the urge to tap into it.

juniorbean

iTrader: (5)

^ That is what we did as well (think we did $150/check... so $300/mo each). Started when she was 19 and I was 21. It does add up quick and allowed us to pay for our wedding plus go to contract on a new construction home (had to put down 10% + 50% of options at contract) within months of each other (contract in May, wedding in July). Obviously we had to put other money in... but that joint account was a HUGE help...

juniorbean

iTrader: (5)

Managing the spend is more what I focus on as well...

WillrunifChased

I agree with you guys.


After working out last year for me I averaged saving 28% of my income.

LaCostaRacer

There won't be a magic percentage for all people. I look at it more of 'How much wealth do you have for your particular age' instead.

For example, it's prudent to save a percentage of income in a savings account each month but how much which is the question of this thread?

I would rather 'save/invest' my money in a stock or promising investment idea than keep a lot of cash in a CD bearing 1%. Of coarse there is risk to that approach, but there are also big gains that go along with the risk. Which is why I like the 'Wealth' calculator based on age as a better guide for how one is doing in life. I started a thread a year back on the 'Millionare Next Door' that explains this in concept in more detail.

I just bumped that thread so you can give it a look.

dmikon

That's my point. There's also no magic net worth/wealth for your particular age. Where a person is in terms of net worth and their savings rate entirely depends on their financial goals.

1Louder

My list was very similar. We are a one income family, so my income has to take care of everything.

1) 401K (8%), Roth IRA (1%)
2) Whole life policy (.5%)
3) Kids education (4%)
4) Christmas (1%)*
5) Emergencies (2%)

After all the bills (mortgage, cars, food, house bills), there isn't a lot of spendable income left. But enough to get by.

* I found that putting money aside every month to use at Christmas time really helps. My normal income can't survive the spike in spending that Christmas brings, so having something there really helps.

thunder04

iTrader: (1)

I don't keep track of what we "save" per say, I just keep track of what we spend. According to Mint's "trends" feature, we save on average $363/mo. Though, that's going to change since I have to adjust my withholdings (I under withheld by a bit in 2011 ).

sporting

Any advice on which brokerage (Vanguard, etrade, etc...) that you have had personal experience with that you liked a lot?

Less fees + awesome gains.

Will Y.

Charles Schwab for us.

We don't use a personal broker or financial advisor for purchases, sales and trades of securities.

sporting

In particular, looking to starting dumping extra money into stocks/mutual funds etc...

Will Y.

Yes, that's one reason we use Schwab-- some of the low-load and no-load mutual funds have worked well for us over the years. We occasionally buy and sell stocks through an investment account (as opposed to retirement accounts) as well; my wife parked some cash there instead of at conventional banks.

LaCostaRacer

I have brokerage accounts with E*Trade and Ameritrade. Of the two, I like E*Trade the most in what's offered. Both are very competitive. I haven't tried Schwab but I'm sure it's very good as well. A lot of people get caught up on commissions but I don't because I don't trade that active so a $7.99 trade .vs. a $9.99 trade might mean a $60 difference for a quarter possibly and usually a lot less than that. I like ETrade's trade execution and their web site a lot.

Most of my money is at E*Trade; however, I like Ameritrade for one tool it offers that ETrade does not which is why I have a little bit there.

YeuEmMaiMai

Since 2005 when our company switched over to a 401K I have averaged $540 a month 401K into 401K,

I at a minimum put $200 a month into my credit union account to save up for my next big purchase.


I have a second account that I use to pay for things as I need them and that is how I paid for my 2 Accords, Acura, and Subaru... along with my insurance premiums in full when they come due. My goal is to have about 1 years pretax salary in reserve +money to use as needed. I am averaging about $1K a month into that one.

maharajamd

iTrader: (1)

25%

nist7

Vanguard 100% for me. The founder, Jack Bogle, is a strong believer in ultra low cost funds and holding out for the long run. Studies have shown that the one thing that can increase return for the average investor is low low fees. The active managers can create alpha (aka, beating the market) a small % of time but you pay that all back in higher fees.

Vanguard is also setup in a way that it is actually owned by the mutual funds themselves...unlike most other investment companies that are privately owned (aka Johnson family of Fidelity). So there is less conflict of interest as well.

Vanguard has the lowest fee mutual funds of basically any of them...save for the military TSP plans which I heard are ridiculous cheap in fees. I only pay 4 basis points (annual Expense Ratio of 0.04%) in my total US stock market index mutual fund through my emplyoer's Roth 403b.

Oh and to answer OP's question...I'm saving between 20-30% (depending on anticipated monthly needs) each month on my paycheck. I just started my career in middle of 2013 and have about $30k invested already with Vanguard! New year started so I gotta get going with my Roth IRA contributions this year as well.

ChodTheWacko

Reply to a post made 7 years ago? Why not, hah.

According to Mint, I save about 56% of my after tax money among retirement and mutual funds. I save a lot simply because I can. No mortage, car payment, etc. One day (perhaps even not that long from now), i'll have be married and have kids and the game will change totally. So I save now, while I can.

I have very few habits that bleed money at a steady rate (drinking, clubbing, smoking, etc, etc). I tend to do a once a year big splurge and buy something expensive like a lens or a camera or a vacation, or whatever. So I tend to keep 5-6 K of "real" money in my checking account. By real, I mean the total is currently 5-6K + whatever my credit card balance is. (paid in full of course).

Exact numbers aren't important.
I like the recommendation of 10-15% if you have no idea how much to save. It's a solid number that requires some fiscal discipline to reach. That's more important than anything.

The exact values you'll need for retirement depend on a ton of factors, not least of which are your heath and where you end up living.

- Frank

Devil Dog 21

Once I hit 6 months of full expenses I quit saving and began paying off debt as quickly as possible. Once the wife's student loans are paid off, the mortgage goes next.

Mizouse

-$34.50/month

doopstr

I thought about paying the mortgage off but my APR is 4%, why bother? I think I do much better leaving that money invested.

Anyway for this subject. I put 6% in 401k because that is what my employer is willing to match. The rest go in IRA or savings account depending on if I think the savings needs to be replenished. I guess I'm saving about 10% in total. Not bad considering I got 5 other lives (plus dog) sucking on my paycheck

My advice to those who are young, save/invest as much as possible now. It's much better to put 40k into investment instead of into BMW. When you get older what you have saved will grow on its own and you won't feel so stressed to have to save.

NSXNEXT

iTrader: (2)

Great advice although most 20-something's are more interested in "the now".
Compounding interest is such a simple concept.

1Louder

Today's people who are more interested in "the now" are tomorrows "fixed income living off social security" population. That is, if SS is even around then.

nist7

Yup, which is why it's even more important to save and invest smart today for a more secure retirement tomorrow.

Because with how insolvent SS is, who knows if it will even be there when the next generation retires in 30-40 years.

Jakes_tl

waking up an old interesting thread.. So how's everyone doing with their savings?

Mizouse

still this.. fml

Jakes_tl

what's -34.50?

Mizouse

$34.50 is a joke from the comedian a Russell Peters about being cheap.

i put a negative sign meaning I'm not saving money but spending more money.

Jakes_tl

well that sounds like a lot of people these days, spend more money then they have.

KaMLuNg

iTrader: (5)

25-30%

Jakes_tl

I am currently doing 6% simple IRA that is provided to us at work but would like to invest more. Is it best to hire a financial advisor or use something like Vanguard?

Jakes_tl

or what would you guys think is the best route for a beginner investor?