Calculate your savings rate and get personalized recommendations to reach your financial goals. Track your progress toward financial independence and early retirement.
Most financial experts recommend saving 20% of your income, but the reality is more nuanced. The "right" savings rate depends on your age, goals, and life circumstances. Someone starting at 22 with a 20% rate could retire by 37, while someone starting at 40 might need 25%+ to catch up.
The key is consistency and gradual improvement. If you're saving 5% now, aim for 10% next year. Small increases compound dramatically over time, and building the habit matters more than perfection.
Start with 10-15%. Focus on building habits and emergency fund. Time is your biggest advantage.
Aim for 15-20%. Balance family needs with retirement savings. Maximize employer matches.
Target 20-25%. Peak earning years mean higher rates possible. Catch-up contributions available.
Push for 25%+ if behind. Use catch-up contributions. Focus on debt elimination before retirement.
Both methods have merit, but using gross income is more common and provides easier benchmarking. However, if you want a more practical view of your discretionary income, net income works too. The key is being consistent in your calculations and understanding which method you're using.
Include everything that builds wealth: 401(k) contributions, IRA contributions, taxable investments, emergency fund additions, extra mortgage payments, and even HSA contributions. Don't count: checking account money, vacation funds, or short-term purchase savings.
Absolutely not! Starting with 5% is infinitely better than 0%. Focus on building the habit first, then gradually increase by 1% each year. Many people successfully retire with lower savings rates - it just takes longer. The key is starting now and staying consistent.
Focus on the big three: housing, transportation, and food. Small optimizations here have huge impacts. Automate increases with raises so you never "feel" the money. Find free or cheap activities you enjoy. Remember: you're not depriving yourself - you're buying future freedom.
Set up automatic transfers for the day after payday. Start with whatever you can - even $50/month. Your brain will adjust to the "new" income level within a few weeks. Increase by $25 every three months until you hit your target savings rate.
This method works because it removes decision fatigue. You're not constantly choosing between spending and saving - the choice is made once, then automated forever.
House hack, get roommates, or move to lower-cost area
Buy used, bike/walk more, consider car-free lifestyle
Cook at home, meal prep, shop sales and seasonal produce