Savings Rate

[Homey The Clown]

I have a question about savings rate. From what I understand MMM calculates this based on take home. But almost all of my savings are pre-tax. I believe he also calculates mortgage principal as part of savings rate. For our family, our income is roughly $135,000 gross and we save roughly $45,000. This is not including mortgage principal. All but $11,000 (Roth IRA) is pre-tax. So our gross savings divided by our gross income gives a 33% savings rate. What's the easiest way to convert this to a net income based savings rate.

I know this doesn't really matter, but a part of me wants to know how I compare when someone else gives their savings rate. Thanks.

[Tigerpine]

Here's a link to MMM's post where he explains how he calculates savings rate, etc.

http://www.mrmoneymustache.com/2015/01/26/calculating-net-worth/

[forummm]

I generally follow MMM's method.

[RWD]

MMM includes pre-tax savings as part of your "take home" pay for purposes of calculating savings rate. This is what I follow as well. Some people on here exclude their mortgage.

The way I calculate my savings rate is with this formula: (Gross - Taxes - Expenses) / (Gross - Taxes). This is easier for me because I track all of my expenses. I treat things like mortgage interest as an expense, but not the principal portion of the payment. This should be equivalent to the more traditional formula: Savings / (Gross - Taxes).