Savings Rates
Did you know the average current savings rate in our country is under 4 percent? That means as a nation we spent more than 96 percent of all the money we earn. How do your own savings percentages compare to that? Take a look at the dollars that you are currently spending. What if you could find a way to save or recapture another 3 to 5 percent of your fixed expense costs? Remember, everything that you do is measured with respect to what everything and everyone else is doing.
Most Americans have no idea how much money they needlessly transfer away during their lifetimes. Look for these unnecessary transfers and expenses and find a way to stop them. The measurable value of opportunity cost is the amount this lost money could have earned for you if it had not trickled out of your wealth bucket.
How much would $100 be worth twenty-five years from now, or fifty years from now . . . if you could hang on to and invest it? Each of us is born with a single timeline. The sooner we put our dollars to work, the greater our future rewards. Consider your lifetime earnings. During a normal forty-year working lifetime, several million dollars in actual physical dollars may pass through your hands. The wealth potential of these dollars is exponential.
For example, annual earnings of $75,000 for forty working years would amount to $3 million of total earnings. This is the amount that will pass through your wealth model. At a normal 3 to 4 percent savings rate, most people would be lucky to be able to hold on to $90,000 to $120,000 of these earnings for their financial priorities. Taxes, expenses, interest, and spending consume the balance.
Examine your own cash flow transfer costs and see if you can recapture any of it. Imagine if only a small portion were recaptured and invested annually over a twenty-year period or longer. This gives you an idea of the costs that you may be overlooking. How much more money would be in your pocket to reinvest or improve your life if you could eliminate or minimize these wealth transfers? This is the measurable impact of your financial decisions. A reduction of only 5 percent would amount to about $3,750 per year. If that amount was able to grow at a hypothetical rate of return of 7 percent for forty years, it could grow to about $800,000! How would that impact your retirement goals or other financial priorities?
Pay It Forward? Hopefully you found the contents on this site useful. Our mission is to promote financial awareness and spread fiscal literacy throughout the world. Our goal is to enhance the lives of over 1M people this year. If you know if anyone else that could benefit from finding some money and eliminating unnecessary wealth transfers, please forward this page to a friend. Remember, if you’re not part of the solution, you might be part of the problem. Thank you in advance for your support and your help in spreading our message.
