Interesting personal finance test

[RikaKazak]

So my dad and I are pretty close. Especially when it comes to the topic of money. All throughout my life my dad has taught me everything from mutual funds (when I was 8) to investing in RE.

This past weekend he gave me an interesting "test" to run on my personal finances...so I thought I would share.

It's very simple. All you do is add up your pre tax income (everything from poker, to investing, to a job etc.) then add up all your savings. Divide, and find out what your personal savings rate is.

Now most of us know that 10%+ savings is good/healthy....but when have you ever actually calculated yours? I know I've "thought about how much I save/should save" but I've never taken the time and done the math.

I know it sounds simple/elementary...but guess what % you're saving, then actually figure it out. I know I was a LONG ways off from what I am actually doing....see how close you can get

[Probability]

scary to even think about.

do you add up your lifetime earnings, not just this years?

[RikaKazak]

Originally Posted by Probability

scary to even think about.

do you add up your lifetime earnings, not just this years?

I did just this year. I wrote it down, so like over the next 5 years I can track it...however "going back in time" much further would be next to impossible for me...hard to remember "how much I saved exactly" u know

[JamesMa]

I save well over 10% but i come from an azn family where saving is always stressed. Only money I really spend is on food, entertainment realy isnt that expensive unlesss Im in vegas buyin bottles and lapdances

[klink-]

^^^ this a savings rate of 10% seems super low.

[RikaKazak]

Originally Posted by klink-

^^^ this a savings rate of 10% seems super low.

The average american "peaked" this year at 4.3%

Liberal personal finance people usually say 10% is key

Conservative finance people usually say 15% is key

(in other countries 10% is low....take Japan for instance, 10% would be below average)

[RikaKazak]

I thought that was kind of interesting. In the early 30's U.S. savings was negative because of the depression....in 2006ish savings was negative because of poor financial planning imo.

Anyone care to guess where the saving rate will be in 2015? Do you think we'll revert back to our poor saving skills, or do you think this little recession/depression will teach us (and we'll remember) how important saving is?

My guess, in 2015 saving will be ~3-5%

[hobiejuan1]

I actually think the personal savings rate will increase over the next ten years. Americans are now realizing that social security will not be there and they need to look out for themselves. The federal deficits right now are terrifying and if you aren't saving a large percentage of your income (i.e. greater than 20) you will be left behind. I would recommend to anyone to keep track of every single dollar that you spend for an entire month. Include everything even a newspaper in this. Then add it up and categorize it at the end of the month. You should be easily about to cut your expenses by 10%. Also save your money in something with tax benefits like a SEP IRA where your pretty much get an instant return on your money with your tax savings.