Author Topic: Calculating Savings Rate  (Read 1859 times)

Grande

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Calculating Savings Rate
« on: April 21, 2014, 12:26:50 PM »
I notice people on this site like expressing their savings rate. I would imagine as a percent of income. Can I ask exactly how  people are calculating this rate. Is it savings over gross income? Or net? If it's net are people subtracting other items in their paychecks such as health and dental insurance expenses?

warfreak2

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Re: Calculating Savings Rate
« Reply #1 on: April 21, 2014, 01:34:59 PM »
It has lots of different meanings in different contexts. For the purposes of the Shockingly Simple Math, your income should include employer contributions but not investment income, and your expenses should include everything, including deductions from your paycheck for tax &c.

It's true that many of your expenses won't be the same before and after FIRE; tax is the most obvious one. It is a simplification, after all...

arebelspy

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Re: Calculating Savings Rate
« Reply #2 on: April 21, 2014, 04:28:28 PM »
In the FAQ there's an answer to this with links to like 6 previous discussions on the topic:
http://forum.mrmoneymustache.com/forum-information-faqs/frequently-asked-questions/

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