50% or better is a great standard when you are working towards extreme early retirement. But as a percentage, it actually says very little about your overall frugality in terms of what you make and what you spend. It also doesn't explain how you calculated it.
The standard formula is to call whatever your paycheck reads as net. This is faulty since it doesn't account for 401K savings, company matches, medical insurance, allowances for tax purposes, or any tax returns and investment income. Strictly by this standard formula, our savings rate would only be around 15% this year.
By my calculations, our gross savings rate is 35-50% and net savings rate is 30-40% using different methods. We should make about $50-53K gross in 2014(with and without 401K company match). And since hubby works a lot of overtime(factory orders), it's almost impossible to take a guess this early. We could end up anywhere from 20% to 60% savings.
I focus on our budget instead. With medical insurance, vacation and everything else, our budget for 2014 is $34K. Everything else is savings determined by income and how much comes out of the unpredictable categories, like home repairs and medical payments. We have to take two kids to the orthodontist this year so that's probably gonna hurt our %. :P But it should be at least 33%.
~Just wanted to add that to achieve a 50% net savings rate using the standard formula, we'd have to spend .74 of the poverty rate for our family of five. If our house was paid for and if we reduced the extra contribution to the 401K, it would be pretty close to 50% net savings. Mortgage interest is 13% of our net income.~
