What % of your income do you save?

[ESMonitor]

To clarify, what % of your net take home pay do you save in cash, if any?

This does not include money you are saving in a retirement plan or investing.

[Nutria]

To clarify, what % of your net take home pay do you save in cash, if any?

I often ask myself that same question, and have no real good answer.

For example, the "cash" that we "save" for vacation is really just a transfer from one account to another. Ditto for appliance breakdown, auto repair, uncategorized, Christmas/Birthday Club.

It's all going to eventually get spent, so is it really savings, or is it deferred spending? And since we're going to spend everything except what we pass onto the kids at our deaths, it's mostly deferred spending.

So... what is "savings" and what is "deferred spending"?

(I'm pretty sure I started a similar thread a few months ago...)

[corn18]

none. It all goes to something.

[Nutria]

none. It all goes to something.

Every dollar has a purpose, eh?

[TexasHusker]

Right now I'm in dividend reinvestment mode --- pouring all excess back into business expansion and new frontiers.

[disneysteve]

To clarify, what % of your net take home pay do you save in cash, if any?

This does not include money you are saving in a retirement plan or investing.

That's kind of an odd definition of "saving". If you leave out pre-tax stuff, retirement plans, and investing, that doesn't leave much. Maybe a few percent of what remains. That's pretty much all for deferred spending, as Nutria said.

Also, do you count extra debt payments as a form of savings? For example, if you make extra principal payments on your mortgage, is that savings since it shortens the loan term and reduces the total interest you will pay?

[Nutria]

Also, do you count extra debt payments as a form of savings? For example, if you make extra principal payments on your mortgage, is that savings since it shortens the loan term and reduces the total interest you will pay?

I don't think that could be categorized as savings from net take home pay.

[ESMonitor]

What % of your net take home pay do you typically save for deferred spending?

[tripods68]

To clarify, what % of your net take home pay do you save in cash, if any?

This does not include money you are saving in a retirement plan or investing.

2016 Net Pay Savings (This savings is after mortgage payment,food, discretionary spending, clothing, transportation, utilities, and zero consumer debt)
Jan - 39%
Feb - 27%
Mar - 22%
April - 42%
May - 14%
June - 9% so far....going to be 18% end of month

27% Average Savings Rate

Month to Month it changes. April is particularly higher because we receive big REFUND, thus saved most of it.

BTW This savings rate will be lower once we hit our target savings/amount next month July. With both of us scheduled to receive pay increase the end of July, we are increasing our tax deferred percentages more; thus lowering our take home pay. The good news, we will be lowering our taxable income for 2016 (lowering our effective tax rate). That's the goal.
But I digress.

[disneysteve]

What % of your net take home pay do you typically save for deferred spending?

I've always measured as a percentage of gross, and that runs between 20 and 25%. I'd have to do some calculating to figure out the net figure.

It's all for deferred spending whether it's our vacation next month, our next car, college tuition, or retirement. We're saving it now to spend it later.

[Nutria]

What % of your net take home pay do you typically save for deferred spending?

24% of our gross base (my wife is a wage-earner, not salaried) income is allocated to bi-monthly, quarterly, semi-annual, annual and "non-specific" future spending.

[ESMonitor]

I guess another way to phrase the question would be what % of your paycheck/direct deposit do you typically save for deferred spending?

Looks like I am about the same range with the responses @ 23.6% saved routinely. I am on a fixed salary and get paid once per month, so it is easy to budget in that respect.

I just bought a car, and I am having to rethink my savings plan (the allocations). Unless I can get another source of income, the overall amount saved/deferred will basically stay the same.

I just read about the Wedge Theory. It states that you make a resolution to save/defer spending 50% of every income increase that you receive in the years to come. Of course, if all you get is a cost of living increase each year, it may gradually get to be more challenging; however, you would already probably have some cash reserves set in place in your expense categories for whatever non-routine high cost expenses you expect to incur e.g. Christmas presents, mechanic's bill, vacation expenses, etc.

Thoughts?

[tripods68]

I just read about the Wedge Theory. It states that you make a resolution to save/defer spending 50% of every income increase that you receive in the years to come. Of course, if all you get is a cost of living increase each year, it may gradually get to be more challenging; however, you would already probably have some cash reserves set in place in your expense categories for whatever non-routine high cost expenses you expect to incur e.g. Christmas presents, mechanic's bill, vacation expenses, etc.

Thoughts?

I've been doing something you described but slightly different. We projected future income, expenses, savings/retirement. We also set "target goal" every 6 months to give me some idea if we are hitting our savings/retirement goal for the year. (Using zero based budget principle). Its far more detail than my regular monthly spreadsheet with different tabs like Investment, Savings, Net Worth.

For instance, I've been projecting our overall Income, Expenses, and Retirement/Savings for 2017, 2018, 2019 (if you know how stable your job/income gives you better approximate number. Commissions based will be very hard). It helps me to know how close we can start thinking about retirement.

Anyway, I plugged all the numbers from Jan to Dec. I also include the pay day date each month we expect to receive. This gives us the BIG PICTURE and projection of our spending habit, savings, or to know how long it will takes to save $30K for a new truck.

The challenge of course is Income and the type of Expenses that might come you don't expect. That's why having a 6 months of EF set aside is good to have available at any time. You hope 6 months is enough. But sometimes you just don't really know what's coming. Meanwhile you just keep savings away.

[disneysteve]

I just read about the Wedge Theory. It states that you make a resolution to save/defer spending 50% of every income increase that you receive in the years to come.

Thoughts?

I haven't gotten a raise for a long time but back when I did, I put a lot more than 50% into savings. I figure if we were managing okay on what I was making, we didn't need to suddenly start spending the additional income. We'd pull out 5 or 10% and put the rest into savings.

I'm actually about to be faced with this with my new job. Right now, I'm still full time at my regular job so the new income is above and beyond what I've been earning for years. In fact, I just got my first paycheck. The plan initially is to use 100% of the extra income to pay off a little debt (car loan) and some upcoming bills. Also, the new job came with a 401k so for now, 10% is coming off the top for that. Once the car loan and bills are taken care of (about $12,000 total), we'll start stashing most of that additional income into savings, probably partly by raising the amount going to the 401k and investing the rest outside of that.

[41Fin]

I direct 45% of my check to an Amex Savings account.

Combination of baby step 3, kid on the way and saving for a house