What % of Net Income should be saved each Year?

Journeyman · Mar 8, 2004

Its really strange in one way I would describe myself as a Miser .... I save and never spend over my means, and on the other end I gamble with no conscience ( a nickle, dime even more at times)....

I will shop at two or three grocery stores to save 15 bucks....even when I win, I don`t spend the money... I save every dollar I can....

How much in your opinion should we save, what % of our income should be saved or invested?
Aferall I am going to be a millionaire!

SportSavant · Mar 8, 2004

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> Its really strange in one way I would describe myself as a Miser .... I save and never spend over my means, and on the other end I gamble with no conscience ( a nickle, dime even more at times)....

I will shop at two or three grocery stores to save 15 bucks....even when I win, I don`t spend the money... I save every dollar I can....

How much in your opinion should we save, what % of our income should be saved or invested?
Aferall I am going to be a millionaire!

<HR></BLOCKQUOTE>

OH MY GOD, you have descirbed myself, I suspect we are not the only two, I will clip coupons to save 25 cents on instant coffee...drive an extra block to save 10 cents on toilet paper....yet at times will bet with reckless abandon (Gonzaga last night...sighhh)...wonbt think twice about a nickel or a dime on a game...why is that?

spidermonkey · Mar 8, 2004

i hate to chime in with a 'me too' but i feel the exact same way sometimes, driving an extra few miles to save 10c on gas!

theswami · Mar 8, 2004

JMan-

There was a book that someone recommended to me YEARS ago before the Millionaire Next Door and books like it were published. The title was "The Wealthy Barber." The story was about a millionaire barber who became one by saving 10% of his earnings from the shop. Here's my view:

1) Save as much as possible and live below your means. I say save more than 10%. Your strategy of saving every penny you can is a good one.

2) A million bucks just isn't what it used to be. You should be using financial software to map out how much you need to save/earn to draw a specific amount in retirement. These applications should be used as a guideline.

3) If by "net income" you are referring to your gambling winnings, that is a personal issue. If gambling is your primary income I would guess that you need to save a TON since you can go on a losing streak at any point. If you do gamble for a living, always keep your bankroll separate from your funds used for normal activities (paying bills, buying groceries, etc.).

4) Find a target. When I was younger I saved just to save (no specific target in mind other than I wanted to buy a house and car eventually). I was derailed a bit and some of that money went to Mrs. Swami as part of the country's biggest scam (engagement ring), the rest was saved. Now I have retirement in mind. I'm sure that will change once kids and college tuition come around.

I don't know your situation but you should be aiming at something for which you want to use the money. If there isn't anything then just save. I assure you there will be something that you will want to use the money for.

WildBill · Mar 8, 2004

Depends on your age and your income level. Most experts say to save 10% or more of your paycheck as an unchangeable issue, then worry about saving more to meet certain goals such as houses, cars, vacations, and costs for the kiddies like college.

oldmanTED · Mar 8, 2004

Journeyman:

After budgeting for all your expenses and your gambling, all your disposable cash should be saved and invested. The percentage or amount depends on each individuals cost of living. If you have a tax free deferred compensation plan available to you, use it. The more money that you remove from your hands and invest, the faster your wealth will grow. Years of a compounding affect will work wonders once you get started. It is never too early to begin saving and investing. Best of luck to you in your attempt at becoming a millionaire. In today's world, it's not that hard to accomplish.

American · Mar 8, 2004

I heard somewhere that the American average household saves about $1500 a year.

That doesn't mean that they all save exactly $1500 though. Some save more than $1500, some save less. Still, there are others who don't save anything at all.

RPM · Mar 8, 2004

including retirement accounts, i believe 25% is a good number to strive for. but that would also depend a lot on your age. if you are young, you can invest a lot less into your retirement accounts.

SportSavant · Mar 8, 2004

Journey,

One thing I have done is MAXIMIZED all of my work related saving Plans/stock options etc...that way if worse comes to worse at least I will have those for me...

Journeyman · Mar 8, 2004

I just try to save like crazy...sometimes though I wonder what for .... I don't know how people live week to week...I would be worried sick if I did...

Tekari · Mar 8, 2004

this thread makes me feel bad for how much I just blow on clothes or out at the bar each week...

it's rough to look back and add up how much you spent at the end of the month and have nothing to show for it

blueedwards · Mar 8, 2004

max out 401k savings and then try to put another 10% away. if you can do that, you'll be ahead of 80% of americans.

JudgeWapner · Mar 8, 2004

0.It all should be pissed away as quickly as possible.

theswami · Mar 8, 2004

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Tekari:
this thread makes me feel bad for how much I just blow on clothes or out at the bar each week...

it's rough to look back and add up how much you spent at the end of the month and have nothing to show for it

<HR></BLOCKQUOTE>

As long as you save enough to meet your goals, I don't see anything wrong with blowing a few bucks but the $$ adds up.

I recently did a budget and I looked at the money my wife and I spent on "Entertainment" (drinking, dining out, parties, movies, golf, etc.) last year and the number is ABSURD!!! We save but we need to find better ways to "entertain" ourselves since we are literally pissing away money. The future value of that money is very high due to compounding.

wolfie_cr · Mar 8, 2004

I would think that if you are doing ok or great financially you should be able to save at least 10% of your income, the trick is to put it in a place where it can "check in but never leave", if you regularly save money and every 3 months you invest it in a long term cd (say 1 year) you will save loads of money

In my family I had both schools, one that saved every possible dime and one that enjoyed money up to the very last dime, both work it's just an issue of what your goal is in life and what your plans are

GreenDoberman · Mar 8, 2004

Take advantage of retirement plans and IRAs. Tax savings will add up over time. Max the 401k's for optimal matching contribution rates.
Save more than you can afford and adjust to live beneath your previous means.
I currently save between 35-45% of my gross income.

King of the Road · Mar 8, 2004

20% is actually pretty realistic, especially if you are maxing out 401k plan. You can save up to 13k per year in one, and if your employer matches a portion of that or makes a profit sharing contribution, you will effectively save that much more. The money grows tax free which is unbelievably powerful over time. Crank out the calculations someday of what saving 17k every year at a realistic rate of return of 8 - 10% and the numbers get really impressive after 20 to 25 years. That's a long time, to be sure, but the sooner you start saving the sooner you get there. And, as your income grows in the future, try to put a larger percentage away (in non-retirement type accounts) and you will still have plenty to improve your standard of living with. Add in some gambling income to supplement your savings and you have a pretty solid plan. In 20+ years, if you stick to it (assuming you have a sufficient income level to start with 60 - 70 k+, you will be close to having a big enough lump sum to live off the income. That's financial freedom.

BAJESUS · Mar 8, 2004

spend it all, don't be a miser. it doesn't do you any good to take it to the grave with you

Journeyman · Mar 8, 2004

Thanks for the well thought out posts guys..Alot of practical answers in this thread...and a few not so practical...

acw · Mar 8, 2004

I will shop at two or three grocery stores to save 15 bucks....
It is ok, as long as you could not use the time extra needed more lucrative.
I am not a big spender simply not materialistic, but I do not save on drinks, food and women I am afraid!