OK now I know most people in the financial news media, repeat and regurgitate the save 10% of all income all the time. But I say forget that; let’s do the best we can today. Let’s begin to save at least 20% of all income for life. Who wants to join the 20% savings club? Well if you’re asking and I’m telling, it means all of us should join the club. If you make 1,000 or 25,000 dollars a month it really doesn’t matter, let’s set aside 20% based off income for life. The strategy will be a bit different from the norm, as you will take 10% in pre-tax savings, like 401K accounts or Roth IRA’s, and the other 10% in after tax savings like a brokerage account. Who wants to join the 20% savings club? (Everybody Should)
How does that sound to you? I think it’s a marvelous idea, because not only are you saving up for the retirement phase of your life, you are also padding your brokerage account for cash to be invested today, that can be used for long term or short term goals. If it were up to the smartest financially minded people, they would never touch any investments and they would let it compound until the time was right to take money out. But I truly understand that life has its ups and downs, and in the down times a little cash infusion goes a long way.
The 20% savings club is exclusive to only a select few, because it is a feat not many can accomplish now days. If you happen to be one of the fortunate investors who can actually make it happen, you will not regret it. Every year income tends to rise for a majority of the people working. Now if you lock step the increase in income with the increase in savings, soon enough you will reach the 30%, 40% and 50% clubs. It gets easier every year, if you’re doing things right. In tandem it gets harder if you’re struggling year after year. People lets learn the money lessons so we can advance ourselves and the wallets holding our greatest wealth building tool, MONEY.
If you are intrigued and want to succeed with joining this club, just increase the 401K amount to 10% and begin an automatic savings withdrawal to fund an after tax brokerage account and I recommend you Open a TradeKing account. They are low cost and offer great service. If you prefer to include the employer matching as part of the 20% figure to join the club, that’s fine. As long as you realize that eventually you can reach the 20% amount all alone without the matching, and it will then be considered gravy at some point.
I am currently investing this amount with the employer matching, and I have other responsibilities that many people don’t have. If you can’t start it today, then mentally prepare yourself to begin the financial adjustments starting next week. Why do I invest so much, because I don’t want to be held into the system forever? By doing this amount I am 1 step closer to achieving my desires.
Personal Finance including individual savings rates is extremely personal, but if you have a supportive financial community pushing you to advance finances. In the end it will only benefit you.
Who wants to join the 20% Savings Club? (Question really should be – who doesn’t?)
Rich Uncle EL
Congrats on being above average in the savings game. 25 % is awesome, and if you hit 30% soon I hope to catch up with you.
I'm trying to save 50% of my take-home pay so far to get to my goal sooner rather than later. 🙂
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Congrats on that huge goal Miss PF, and when you reach that goal I want to know. Good luck and thanks for stopping by.
My recent post Who wants to Join The 20% Savings Club
Currently sitting at 27% and trying to increase. I think sometimes getting to the 20% range can be misconstrued as "cut, cut, cut". While watching spending is a big part of that goal, I like to focus on opportunities to increase income. I tend to focus on stocks and the markets, but hope to jump into other areas, as well. If you can just increase your income by a little, that increase goes straight to your bottom line. And, when you're working to increase your income, you're not spending! Win-win!
Thanks for the good write up!
My recent post Lessons of an Investing Addict Part 1: The Groundwork of an Investor
Yes increasing income and also in turn cutting some expenses is the best bang for saving a lot of money. Its def. true when you work longer hours, your spending less. Leisure time can be a dent on the budget.
My recent post The Sad State of Retirement
The wife and are already there. We’re at ~ 24%. It’s unlikely that it will – or need – to go any higher as we are right where we need to be with respect to our retirement portfolio. At this point we’re just on auto-pilot, cruising into retirement.
Very nice savings rate you have SavvyJames. I think you can hit 26% in 2016, 27% in 2017, etc keep it in lock step with the year. I am also above 20% and hopefully growing it every year until I retire, no matter how the markets perform.