In this story, the authors calculate how much income is needed to lead “the good life” - two late model cars, a second vacation home, private school for two kids, etc.
The article includes this claim:
Can it be true that for ALL Americans, the average is only 1%, or less, to savings?
I can’t wrap my head around it.
Dopers? What percentage of your income goes into savings? And could it be more if savings were a priority?
My answer: I was always taught that the basic, keep-it-simple principle was that you divide your income into thirds: save a third, invest a third, spend a third. Savings were short-term instruments like savings accounts, where your money was highly liquid and you could get to it quickly, with no penalties, for an emergency. Investing involved funds, stocks, bonds, or legitimate collectibles that would arguably appreciate over time. And “spend” meant your ordinary expenses - for living and fun.
If you live that way, it always seemed to me, while you might not have as many fun toys as the guy next door, you won’t get hurt nearly as hard by the same disaster that wipes him out.
I can easily imagine variances in that formula… especially if you’re barely earning enough to get by. When I was younger, there was no “invest” column… I was yting to save a third and living on two-thirds, because I needed every bit of that two-thirds to do crazy stuff like eat and pay rent. Often I had to dip into savings. So the formula does fall apart at low-income levels, and I understand that. Hell, I lived it.