### Author Topic: Best way to calculate % to savings  (Read 3396 times)

#### Zaga

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• Age: 40
• Location: North of Pittsburgh, PA
##### Best way to calculate % to savings
« on: December 09, 2012, 08:45:21 AM »
So I was wondering how mustachians calculate the percent they save each month.  I'll give my approximate numbers so you can see my confusion.

Between 401-K withholdings and the company match we put away just over \$2K a month.
Our debt reduction is another just over \$1K a month on average, probably higher next year.
Our take home pay averaged over the past year almost exactly \$6K, that's what's actually in our paychecks.
Our gross income is about \$10K a month.

So is our saving percentage about 50%, because debt reduction plus 401-K divided by take home pay is that?  Or some other calculation based on gross income?

Thanks for any suggestions, I just want a consistent barometer to go by.

#### chucklesmcgee

• Pencil Stache
• Posts: 613
##### Re: Best way to calculate % to savings
« Reply #1 on: December 09, 2012, 08:54:37 AM »
So I was wondering how mustachians calculate the percent they save each month.  I'll give my approximate numbers so you can see my confusion.

Between 401-K withholdings and the company match we put away just over \$2K a month.
Our debt reduction is another just over \$1K a month on average, probably higher next year.
Our take home pay averaged over the past year almost exactly \$6K, that's what's actually in our paychecks.
Our gross income is about \$10K a month.

So is our saving percentage about 50%, because debt reduction plus 401-K divided by take home pay is that?  Or some other calculation based on gross income?

Thanks for any suggestions, I just want a consistent barometer to go by.

I think you're right. (Amount put towards increasing net worth)/(takehome pay)=savings percent.

#### Zaga

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• Posts: 2476
• Age: 40
• Location: North of Pittsburgh, PA
##### Re: Best way to calculate % to savings
« Reply #2 on: December 09, 2012, 10:40:02 AM »
But I haven't included the 401-K portion as a part of the denominator in that calculation, and maybe I should?

#### arebelspy

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##### Re: Best way to calculate % to savings
« Reply #3 on: December 09, 2012, 11:26:00 AM »
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

#### Zaga

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• Posts: 2476
• Age: 40
• Location: North of Pittsburgh, PA
##### Re: Best way to calculate % to savings
« Reply #4 on: December 09, 2012, 12:09:30 PM »
Thanks Rebel, I obviously didn't spend time searching for what I was looking for.

Previous to this I have used the formula:  total savings counting the company match / total gross income.  That's not terribly useful I'm finding since we spend less than half of our gross, and a significant part of that is because of taxes.  Counting federal, state, local, property, sales, and both sides of payroll taxes we are at over 40% of gross to various taxes.  This will certainly go down in retirement except for sales and property taxes.