Saving Money: Is A 10% Savings Rate Really Enough

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    The Myth of the 10% Savings Rate

    1. Church says:

      What a great line “…establishing (or re-establishing) the habit of saving is more important than the actual amount you save.”

      I couldn’t agree more.

      Great post!

      • Stefanie says:

        Yes, this is SO important to keep in mind when we’re struggling to start saving.

        • Great articles….and great site for that matter. Very informative. I love it! Keep up the good work. As to this article. I couldn’t agree with you more that it is extremely important to establish good financial habits, disrupt the status quo and increase that savings rate. The tricky part can be finding the free cash flow for some, but it can be done. If not, increase the income by providing value at work or increasing passive income from investing, etc.

    2. Great post!

      I personally believe that individuals savings rates are so low because our ability to access information instantly. By being able to have this unlimited/fast access to information, we have the ability to find anything we want RIGHT NOW. This means that there is no delayed process that is taking place in our mindset, so we become accustomed to getting things instantly. How does this affect our savings rates?

      Well because we are used to getting information instantly, we are becoming more and more accustomed to short term satisfactions. It isn’t fun/cool to wait for your desires when you can have them now! Same goes with our money…What’s fun about saving money for the future when we can buy what we want now!?

      Thanks for sharing this!

      • Stefanie says:

        Absolutely. Thanks for sharing Sean. There’s definitely a lot of present bias we need to combat in order to save successfully.

    3. Excellent post. I do think it’s hard for people who can’t save even 10% right away to get started because already it feels too hard, but working up to (and past it) is a good way to start. Massive savings of over 50% is how people get to early retirement!

      • Stefanie says:

        Absolutely. I think we need to challenge ourselves on both ends. First, at the beginning, to set aside what we can, even if it doesn’t feel like much, because establishing the savings habit is SO valuable. And then second, as our income grows, to grow ours savings rate in tandem with those pay increases.

    4. Joe says:

      It’s really difficult to increase your saving rate when you don’t have much income. Our new tenant is young and she’ll have a hard time saving even 10% of her income. The cost of living here is too high. She will need to increase her income to have a better chance. Establishing good spending and saving habit is very important at that stage.
      Great post for new savers.

      • Stefanie says:

        Agreed. When you’re just starting out or not making much, the habit of saving (no matter how small) is definitely more important than the amount.

      • I agree with your comments. Also think its important to point out that a forced savings for long term financial health through the 401k is even better. Many times employers match funds (which means you are getting 100% return up front) and you are saving the income tax amount you would otherwise be paying on those funds at the end of the year……… this may help with bumping up to 10% for young savers. However, obviously this is more long term savings as you can’t withdrawal these funds absent certain exception before 59 1/2. However, one of those exceptions is a down payment, etc. young savers should look into this option.

    5. Paul says:

      I don’t think many people have the option to save more than 10% of their earnings. If they did they would automatically do that, I don’t want to insult their intelligence. The problem is they just aren’t making enough over their expenses. They simply need to create another income stream.

      • Stefanie says:

        I agree that saving even 10% is a challenge for many. Working to increase income definitely helps! That said, the proportion of mid – high earners struggling with consumer debt and unprepared for retirement is still significant. So priority number one will definitely be breaking the paycheck to paycheck cycle, but we have to make sure we don’t stop there, or even at a 10% savings rate.

    6. Katie says:

      I love your point about saving being looked at as a long term goal and not a short term sacrifice. We’re curently saving 60% of our income towards early retirement (while also paying for daycare for our kids!) and it’s 100% because we have a bigger goal in mind. It doesn’t feel like a hardship to give up fancy date nights when we know we’ll be retired at 33 😉

    7. Steph says:

      Love this post! And I appreciate you addressing it isn’t always possible for EVERYONE to save even 10%! I’ve finally gotten into the groove of saving 40%, but breaking into the 50% saber club has been much harder than I thought.
      10% isn’t a lot, but it’s better than nothing!

    8. Rodney Allen Hampton says:

      Great advice here, keep at it.

    9. iris says:

      I also set a goal to save more. I’ve recently switched to a healthier lifestyle, i’ve started training for a race with SportMe half marathon app and also striving for a managing my money better. Hopefully my efforts will pay back soon.

    10. iris says:

      I’ve also switched to a healthier lifestyle and training with SportMe half marathon app and also striving to get my finances back on track. Your blog posts are super helpful and your philosophy works almost eery time.

    11. MrMoneyBanks says:

      I think you’re absolutely right. I heard a stat the other day that says that if you want to retire on a lifestyle that you’re accustomed to then you need to save 20% of your income over 35+ years. That’s a hell of a lot more than the 10% we often talk about.

    12. Wired says:

      Saving money is one of the best things you can do. It lowers your stress level and improves your relationships. Thanks

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