When I was in my early twenties I tried to save by giving myself a limited budget. But after student debt and rent and everything else I barely had anything left. I could not get past 20% no matter how hard I tried.
What really got my savings rate up is dual income.
When I first got together with my then boyfriend, now husband, I proposed a 50% savings rate. He freaked out. He thought it was impossibly high. But fifteen years later we are still at it and it is the single most important thing that got us to where we are today.
The truth is the more you earn the more percentage you should save. Unless you are one of those people with severe lifestyle inflation. So set this target early because I promise you it will make you rethink every lifestyle upgrade. Lifestyle inflation still happens because let’s face it, 50% of a growing income is still a ton of money. But if you hold yourself to a high standard from the beginning you will continue to save 50% of every raise. And at the end of the day that is what really matters.
This calculator shows you where your savings rate ranks compared to other American households at your income level, and how it maps to your timeline to financial independence.
Key Savings Rate Facts (2022-2024 Data)
- National personal savings rate: 3.4% (BEA 2024)
- Historical average savings rate: 8.9% (1959-2024)
- Bottom 40% of households have negative savings rates (spend more than they earn)
- A 50% savings rate means financial independence in ~17 years
- Every 5% increase in savings rate cuts years off your FI timeline
Source: Bureau of Economic Analysis, Bureau of Labor Statistics Consumer Expenditure Survey 2022