I’m not one to reinvent the wheel, so I’m going to direct you to the best post I’ve found on calculating savings rate: Big ERN’s You want to know our savings rate? Which one?
#THE SHOCKINGLY SIMPLE MATH BEHIND EARLY RETIREMENT JAN 2012 HOW TO#
In order to map a single % to an estimate of years to FI, it has many baked in assumptions that can break down depending on your own unique situation.īelow, I’ll dive into a few of those assumptions, how to work around them in your own calculations, and suggest an alternative that can work better than savings rate for most. However, even if savings rate is one of the best universal metrics of the FI world, it’s not without its own set of flaws. There’s even a useful chart that maps savings rate (in every 5% increment) to the number of years to FI! Savings rate even sits at the heart of one of the most popular FI blog posts of all time: The Shockingly Simple Math Behind Early Retirement. One of the most powerful tools for ball-parking a potential FI date is savings rate, so it’s no surprise that it comes up often. Each item helps you stay on track towards your goals, see progress in real time, and project into the future what your financial situation might look like.
Great numbers to keep track of include income, spending, debt, net worth, and more. In the pursuit of financial independence, tracking your numbers is one of the most important habits you can get into.
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