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A Savings Awakening

Just under a month ago

I came across an article that gave me a whole new view of savings. Prior to coming across this article and the simple yet extremely effective online calculator, I took pride in what I was socking away. My strategy was for every month worked, I saved two months worth of expenses. When most people aren’t saving a dime, I thought I was doing really, really well.

I was missing

something though. While saving a healthy amount each month, what I wasn’t doing was calculating just how much percentage wise, I was putting away. You should check out the calculator yourself here but what it boils down to is based on your current savings percent rate vs. your income, it spits out how many years it’ll be before you’re financially independent.

Now, as you get to know me better, you’ll find out that not only do I love numbers but I also love a challenge. After plugging my numbers in and seeing that I have 8.1 years until I’m FI, I decided I needed to know the trend on my savings rate for the last few years. So what did I do? I went back into the budget spreadsheets I’ve kept since 2012 and ran the math on my savings percent rate. This is what I found:

Savings Chart

The Chart

and the data surprised me a bit. To start, back in 2012 and 2013, I wasn’t saving anything. Ok, technically it wasn’t a goose egg in the savings column but it was pretty close. It turns out 2016 was the turning point for me. My savings rate jumped considerably. The other thing I needed to take into account was the retirement contributions I was making. You’ll notice the adjusted savings % line in the chart which is at a higher savings rate than the savings % line. This reflects the many thousands of additional dollars I contribute to 401k and IRAs.

2018 is tracking very close to 2017 numbers through April. Now that I am fully aware of just how much percentage wise I’m putting away, I can bring additional focus to spends. As my goal is to be FI by the time I turn 45 (I turn 37 next month), I’m right on track to reach my goal. I’m not one to just meet goals though…I always find ways to beat them. I’ll keep you posted on saving percent rates throughout the year and check out more about my pursuit of FI at Retiring By 45 and on Twitter @retiringby45.

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