Effective Savings %

[Corsa]

Hi All

Another quick question, I was wondering if people could help me get some perspective on what they save each week from an effective savings point of view.

This would be where Effective Savings is defined as the % of Employment Income that is set aside each period for general savings plus money required to support other Investments.

I really appreciate everyones input in respect of this poll and any opinions would be welcomed.

Best Wishes

Corsa

 

[Punchy]

Hi. At the moment I only save 10%. I am hoping to invest an additional 10% in the local community ala "Richest Man in Babylon" style.

Cheers

Punchy

 

[Merovingian]

I chose 31% - 40%, as I still live at home, and only do casual work at the moment. I estimate this is how much that is saved 'properly'.

This figure may wildly differ, due in part to 'larger' purchases.

 

[alexlee]

I save an average of 40-50% of my after tax income. The breakdown is approximately:

Rent 20%
Food 18%
Entertainment 15 - 20%

Basically, cook at home most of the time. I pay all of the rent but my girlfriend pays the utilities.

Sounds dull, but my colleagues are all blowing all of their pay and scared to death of quitting or getting fired. I'm like, Yeah, whatever. I'll quit when I get sick of this and just take a few months off. In fact, I plan to do that this year.
Alex

 

[The Y-man]

Our "essential living costs" are about 30% of combined employment income. Another 10%-20% might go to "non-critical" spending, and the rest towards interest payments - which means that one person's pay packet goes entirely towards paying interest and other investment costs.....

Cheers,

The Y-man

 

[Patosan]

Ah there's something I hadn't thought about ... "combined" income.
The fact that many households have 2 incomes makes the savings and spending equation different to those of us that are the single bread winner.
this must effect the savings % strongly.

How many of us are single income families ?

 

[likewow]

Our "essential living costs" are about 30% of combined employment income. Another 10%-20% might go to "non-critical" spending, and the rest towards interest payments - which means that one person's pay packet goes entirely towards paying interest and other investment costs.....

Cheers,

The Y-man

Y man,

One whole pay packet to pay for investments? You must have some serious neg gearing happening down there mate.

 

[see_change]

Not sure if I've ever saved any money .... Well certainly not since three kids came along....



See Change

 

[gameover]

"which means that one person's pay packet goes entirely towards paying interest and other investment costs....."

I thought investments were supposed to make money?

 

[duncan_m]

I thought investments were supposed to make money?

The more I invest, the more I'm comfortable with Capital Gain being "money".

 

[MichaelW]

All,

I note 4 people have said a big fat zero% of their income goes to investments/savings. What the??? Not even a penny on the pound? If you're spending every cent you earn, then well done for at least making it to this forum...

I pay my entire monthly after tax salary ($6.5K) off the mortgage on my PPOR, and we live off my wife's income ($3K). If you include the PPOR in the investment category then we're investing 70% on assets and blowing 30%. Some would argue the house is dead money, in that case I'm with the 0% club.

I count it as an investment as its a growth asset, I can use the equity to fund other investments without selling so the equity I'm building is all investment.

Cheers,
Michael.

 

[duncan_m]

I also havent saved a cent in years. I dont even try and pay down the debt on my properties.

My job income keeps me happy now, things for the kids, private schools, new toys and tools for me, etc.. My investments will more than keep me happy in the future. I dont need to save.

Yes I could do better if I saved a bit (marginally) but why bother, I love spending money and my financial future is assured already.

 

[alexlee]

So, Duncan, you're not interested in retiring earlier? Just curious as that's my prime goal: retiring early and getting the heck out of this whole job concept.

Obviously I realise everyone is different. But are you that satisfied with your job that you prefer it to say spending more time with your family, travelling the world, playing sports, or whatever else you fancy? If you ARE that satisfied with your job, I envy you......
Alex

 

[keithj]

I note 4 people have said a big fat zero% of their income goes to investments/savings. What the??? Not even a penny on the pound? If you're spending every cent you earn, then well done for at least making it to this forum...

Some people have no employment income, only passive income.

 

[duncan_m]

So, Duncan, you're not interested in retiring earlier? Just curious as that's my prime goal: retiring early and getting the heck out of this whole job concept.

Whilst I DO enjoy my job I am looking forward to not having to work in a classic 9-5 job.. but I've been buying property for 6-7 yrs now, my future is reasonably assured, I could buy no more and retire comfortably without selling anything.

My point is that devoting energy to saving money from my wages barely changes the outcome of my retirement now. My property assets are now in the millions. The impact on my 'NOW lifestyle' of attempting to save some of my wages doesnt recompense me in the future adequately enough to justify it.

I've reached a level that I'm now "exempt" from the pressure to save.

 

[alexlee]

Which means you can retire now, right? I'm just curious to see why someone would keep working when they are already financially able to retire. Unless you really like your job.

 

[duncan_m]

Which means you can retire now, right? I'm just curious to see why someone would keep working when they are already financially able to retire. Unless you really like your job.

Yes I enjoy my job, I love the team I have and the company I work for.

But I'm not confident if I stopped work at this point that things like contact with mates (whom all still work), sleeping hours, how I manage my kids, etc etc wouldn't all go somewhat pearshaped. So in essence, my job/working life gives me a "framework" at this point that helps me manage myself and the kids.

And at the end of the day the longer I leave it, the better off I'll be, so I'm going to work for a few more years yet.

 

[see_change]

All,

I note 4 people have said a big fat zero% of their income goes to investments/savings. What the??? Not even a penny on the pound? If you're spending every cent you earn, then well done for at least making it to this forum...

Cheers,
Michael.

We spent about the first fourteen year of our marraige paying money off on our PPOR mortgage which was still large at the end. Since we've stopped saving and put our efforts into investing with OPM's , we've paid our mortgage off ( three years later ...) and a further three years later have considerable equity in our IP's.

You'll notice the original poll said income into "savings" . We don't put any money into savings, though we do put a small amount into our investment / IP portfolio, mainly to cover repairs. This is done pre tax through a family trust fund associated with my business.

See Change

 

[MichaelW]

See_change,

Good point. My wife and I managed to put $400K down on our PPOR though based on investments before we bought. We now only owe $180K and the place is valued around $700K-$750K. At our current repayment rate we'll own it in 2.5 years time outright.

If I can spot an investment that returns better than our 6.5% standard variable loan then I'll take it, but my personal view of the current market is that for buy-and-holds you can't get this. If you're up to wraps etc then you can always get a good return, but that's not where I play.

I'll keep knocking off the PPOR for now, but keep my eyes open to alternatives.

Cheers,
Michael.

PS. I should learn to read the question better before posting a reply... "Employment Income" and "Savings"... Maybe my answer should be zero since paying off the mortgage is zero in to savings per se.

 

[Glebe]

Wife and I are in between investments, so saving a bucketload. No mortgage, no negatively geared investments, saving $5000 - $5500 a month.