Evening moustachian crew. I would appreciate any insight you could offer on calculating my exact savings rate. I will use this as a starting point to work towards FI.
WEEKLY paycheck includes:
Gross Income - 1,055.39
Federal Income - 129.42
FICA - 80.17
CA SDI Income Tax - 9.43
CA Income Tax - 31.29
401K Contribution - 158.31
401 Employer Match - 42.22
Medical/Dental - 7.58
MONTHLY Total Spending comes out to 2136.49 (working on bringing this down, I promise)
MONTHLY General Savings - 455.00
MONTHLY Roth Ira - 140.00
To complicate things further, I earn a $500 stipend MONTHLY for an internship. After assuming a 25% tax due to my 2017 tax bracket, the average monthly pay out for 10 months should be 312.50.
Below is my best attempt to follow MMM's formula for figuring out your savings rate.
(1055.39-129.42-80.17-9.43-31.29+158.31+42.22-7.58)*4 weeks of pay = 3992.12 + 312.50 = "Take Home Pay"
(Take home pay – spending) / (take home pay) = Savings Rate
(4304.62-2136.49)/4304.62 = 50%
As awesome as 50% savings rate sounds, I think I'm doing some math wrong here because there is plenty of room for improvement in my life financially. My questions include the following:
1) MMM states in his article How Rich Are You? that he doesn't count income tax or payroll tax, yet further down the same article he uses Federal and State taxes. I don't know how these differ from the taxes on my paycheck. So should I include the above taxes? And if not, what should I replace them with?
2) Should I add my 401 K contribution like my Employer Match? Or subtract it? I don't consider it an expense as it's an investment but I'm a little unclear here. And it makes a HUGE difference whether I add or subtract it so I want to make sure I get this right.
3) Should I add my medical/dental insurance as it comes in pre tax per my company policy?
Thanks for your help!