Tuesday, August 11, 2009

Proper Rate of Savings

Fortunately for savers, banks and brokerages have made it much easier to put savings on auto-pilot than it used to be. Before the days of online savings accounts and ACH transfers people actually had to sit down and write a check to savings, or deposit cash into their savings accounts. Sounds archaic, I know, but it did separate the disciplined savers from the free-spirited spenders.

Today we have a variety of ways to save for retirement, rainy days and big goals. But deciding just how much to save is the tough part. Financial gurus all have their own numbers - 15% for retirement, 10% of your overall income, half of your income - I could go on forever. However, deciding how much to save is a personal decision that looks more like a balancing act than a hard, fast rule. After all, there are many competing priorities for our money. The 10% rule

One of the more established ideas is to simply save 10% of your income. If you earn $50,000 a year, under this plan you should be putting away about $5,000 a year into a variety of investments and cash savings accounts. 10% should not be enough to break your budget, but it doesn't cause you to stretch very far either. I prefer to aim higher with my rate of savings, but how much higher? Read the entire article.

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"Simplicity of living, if deliberately chosen, implies a compassionate approach to life. It means that we are choosing to live our daily lives with some degree of conscious appreciation of the condition of the rest of the world." Duane Elgin

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