Save 50% of income or just don’t bother

OK, so you want to be frugal and gain financial freedom, well, I have a viewpoint that some people may regard as being controversial. I think you should being saving at least 50% of your income, or it’s not worth it.

Yes, you maybe clipping coupons, getting a free flight using your credit card rewards, and perhaps shopping for cheap gas at Costco or Sam’s club to save those extra dollars, but you could just be wasting your time. Why do I say this, well it is largely due to some basic math that rules our lives:

Save 10% of your income, which is what we are often told to do by the general financial service industry (and most people don’t get even close to saving this much) well this is going to take you 51.4 years to be financially independent, great thanks for that advice, just 51.4 years until I have earned my freedom, I just can’t wait, how exciting!

OK, so let’s go crazy and double the recommended savings amount at get to 20%. Right, good idea, now you just have to work for 36.7 years. Maybe that sounds like a great deal to you? Start working at 23, and don’t worry, you’ll be free when you are 60. I’m sure you can go wild at that stage in your life!

Now let’s for a super high 30% saving rate, some people would say you are were completely crazy to save so much, what a looser you are for not spending it all right now. Although, if you were India and China this would probably be regarded as being quite normal, which goes to show the wisdom of ancient cultures. Well, yes, I do think you are actually little crazy, but for saving too little, because now you still have to work for 28 years, which still looks way too long in my book.

40%, yes that’s right, a 40% savings rate, who does that in this day and age, this person must be insane, yes insane! Well, some smart people that you don’t see do this, but how would you know because you are stuck at work and they are already off enjoying themselves, having quit years ago. 40% means that you have to work only for 21.6 years, not bad hey? Well, if you hate your job, like most Americans do, why don’t you just stick this loathsome job out for at least the next two decades?

Now we are getting to the numbers that I like, let’s go with the 50% mentioned in the title of this post. At a 50% savings rate, you are down to working only 16.6 years, not bad hey? Graduate college at 23, and be free before aged 40, so you can at least enjoy the end of your youth.

60% savings is getting more like it, as your entire working career is now a grand 12.4 years in total, and you would be free in your mid-thirties starting at aged 23, now that is more like it.

Let’s go mad and get into the realm of 70% savings, now it’s 8.8 years, so start this at aged 23 and be completely retired at aged 30, now that is what I call freedom.

Getting my argument? If you are not up in this 50% + savings rate, you might as well work a normal career, save 10% for a rainy day, and just use the rest of the money to try and make your weekends a happy time instead before you go back to that 9-5 for the other 5 days of your week.

How can you learn to save so much money, why not read this blog and see if it can give you some ideas?

There is also another big reason I really like the idea of saving 50% or more of one’s income. It means that every year that you work, you have just saved up a years worth of freedom at the same time. Sounds like a much better deal than that 10% and wait 54 years……