Practical guides to saving, budgeting and getting started with investing, written in 2021 and 2022. Dates show when each guide was published. For the team's current work, read the latest analysis.
Many people want to travel the world or have some travel goals, but very few people actually manage to save enough to fulfill their goals. On the other hand, some people actually manage to travel the world without saving for years. So, should you first save money or skip the wait and travel worldwide? While savings always comes first, you don’t have to postpone your travel goals either. When saving for travel, you should put traveling as your major goal and cut down on luxuries, reduce…
Since the coronavirus pandemic, inflation has jumped from 2% to highs of over 8%. At the same time, the interest rates on savings in most banks have remained lower than 1%. Saving outside a bank is possible, but each alternative changes the balance of return, liquidity and protection. Credit unions, peer-to-peer lending and crypto products were among the options discussed when this article was written.
Saving money goes beyond just acquiring more wealth. While this is a worthy objective, the rationale for saving money often comes from a desire to reach a specific and tangible personal goal. Planning your finances is always a good idea, and your savings act as a safety net if the economy takes a downturn. Countries can’t just print money and give it to you. When countries have too much money in circulation, they risk inflation, which occurs when the increase in money supply is greater than…
The Fat FIRE movement is for people wanting to retire early with an above-average lifestyle. If you're considering joining it, you're probably wondering what's the best way to start and progress without default. Here's the short answer: Fat FIRE is having 25 times or more of your expected annual retirement expenses to cover an upscale retirement lifestyle. To reach the Fat FIRE portfolio level, you'll need to save 40 to 50% of your income and have 80 to 100% investments in stock. Though the…
Financial Independence, Retire Early (FIRE) is a movement that involves aggressive financial decisions. One recurring question is whether to pay off the mortgage or invest. My rough rule was to lean toward the mortgage when stability mattered most, the rate was above 4.5% or retirement was close; with a lower rate and longer horizon, I leaned toward investing.
Lean FIRE is the shortest route to financial independence and early retirement. It requires you to cut off wasteful spending to focus on necessities. With such an arrangement, it is easier to achieve your FIRE number sooner, but how much exactly do you need to Lean FIRE? Here's the short answer: You need 25 times your annual expected retirement expenses to achieve Lean FIRE. Given a frugal lifestyle, $1,000,000 or less is sufficient. This means annual expenditures of no more than $40,000, or…
Lean FIRE is a variant of the FIRE movement that offers a quick path to retirement through saving enough for long-term sustenance. Unlike full FIRE, Lean FIRE requires a much smaller portfolio, making it ideal for low and medium-income earners. To achieve Lean FIRE, you have to accumulate a portfolio that can support a frugal lifestyle. Generally, this is 25 times your estimated retirement expenses. For most people, a portfolio of $1,000,000 is enough to Lean FIRE. This article is for you if…
As humans, we naturally want to figure out how we're doing compared to other people. Today, I'll calculate how much people on average save monthly, so that you can know how well you're doing. Let me get straight to the point: The average monthly household saving in The U.S. is $404. The median monthly savings is $281. This is based on the average and median household income and the average personal savings rate of 5%. I'll throw in some charts and tables to make it more visually interesting.…
There are several ways of estimating how much you should save per day. Most people go for a percentage of their income, which is fine and well, but in my opinion rather arbitrary. In this article, we'll do it more thoroughly. Here's the short answer: Generally, you should save 20% of your annual income. To get it in daily terms, divide it by 365. For example, if you make $50,000 annually, you should save $50,000 \ 20% / 365 = $27.4 per day. But you're not looking for the general answer; you're…
For most people, $400 isn't life-changing money. But $400 a month, consistently, can be. Whether you're saving for a vacation, a new car, retirement, or just to build up an emergency fund, $400 a month can be the difference between success and failure. Let me get straight to the point: To save $400 a month, make a monthly budget with such a surplus. First, calculate your monthly expenses. Then, your monthly income. Manipulate the expenses to the point where you're saving $400 a month. Lastly,…
Saving a quarter of your income is challenging, but doable. But is saving 25% good enough? Should you aim higher? Here's the short answer: Yes, saving 25% of your income is good. It is five times better than the American average savings rate of 5%. Given a median income, saving 25% of that equals $14,153 in annual savings. Below you see the average savings rate for American workers: ::figure{src="/images/legacy/2022/09/average-savings-rate-us-edecaae473.png" alt="average saving of ones income"…
Few people manage to save half of their income. But those who do, and stick with it over, are sure to be rewarded for it in the end. But just how good is it? How much better is it to save 50% rather than the average savings rate? Here's the short answer: Yes, saving 50% of your income is good. It's ten times better than the average personal savings rate. Given a median income, you can become a millionaire in 19 years if you invest it all in index funds. But you're probably not looking for "the…
Becoming rich is just a matter of accumulating enough assets, but can you get there through saving alone? Not for most people. Saving builds the foundation, while investing adds the compounding that makes long-term wealth much more achievable. I'll give you a bunch of examples and charts later in the article, but first, a principle I think is important: saving alone is a weak long-term wealth-building strategy. I first understood…
Canceling Netflix will not make you rich. Dropping the occasional Starbucks coffee will not save your finances. In this article, I'll give you a fast, no-BS way to consistently save a lot of money. Here's the short answer: To save a lot of money fast, concentrate on housing, transportation, insurance and food. On average, these four items make up more than 75% of the budget. Focusing on them, you can save roughly $1,250 monthly. My basic philosophy when it comes to saving money is this: Small…
In this article, I’ll give you a list of calculations showing how much different sums saved weekly will turn into after one year. I'll provide 52 different examples of weekly sums saved for a year. Oh, and if you're a weekly saver, consider this cool challenge: Save the same amount of dollars as the week you're in. For example, save $1 this week, $2 the next week, $3 in week three, and so on. How many weeks are you able to keep going? (based on this challenge) Suggested reading: The 4 Steps To…
Saving anything more than 10% of your income is better than 2/3 of Americans. Saving as much as 30% of your income will put you leaps and bounds ahead. In today's article, I'm looking at just how good saving 30% is, and where you'll end up if you stick with it. Here's the short answer: Yes, saving 30% of your income is good. It's six times better than the average personal savings rate of 5%. Earning a median salary and saving 30% will make you a millionaire in 24 years. In the rest of the…
In this article, I'll give you a list of calculations showing how much different sums saved monthly will turn into after one year. I'll divide it into five lists, as shown in the table of contents: Suggested reading: How Much Should YOU Save Per Year? (Examples and Charts) Suggested reading: The 4 Steps To Save A Lot Of Money Fast Saving $10 - $90 a month for one year: Amount Saved Monthly Sum After One Year --- --- $10 $120 $20 $240 $30 $360 $40 $480 $50 $600 $60 $720 $70 $840 $80 $960 $90…
Ever wondered how what a monthly savings plan will turn into after ten years? In this article, I'll show you 46 different examples! I'll show you how much saving different sums a month for ten years turns into, and also what it turns into if you invest that same amount for ten years (assuming a 7% annual return). I’ll divide it into five lists, as shown in the table of contents below: Suggested reading: How Much Should YOU Save Per Year? (Examples and Charts) Suggested reading: The 4 Steps To…
Saving 40% of your income is an incredible feat. It takes a true financial mutant to do that. Today, I'll tell you how I did it, and also where it might take you in the future if you stick with it. Here's the short answer: Yes, saving 40% of your income is good. It's eight times better than the average personal savings rate of 5%. Earning a median salary and saving 40% will make you a millionaire in 21 years. In the rest of the article, we'll look deeper into this, and figure out where saving…
We're all trying to save more money. But how much is enough? I see the classic "save 20% of your income" all over the place, but is that enough? Yes, saving 20% of your income is enough for most people. It'll ensure a good retirement and sufficient short-term savings for things like trips, a new car, or unexpected significant expenses. But you don't care about "most people". You want to know if saving 20% of your income is enough for you ! In this article, I'll help you figure out just that.…
Saving $30,000 in a year is a lot. It takes a well-thought-out plan and some hard decisions to reach that level of saving. However, it's within your reach, as I'll show later in this article. Here's the short answer: To save $30,000 in one year, you need to spend $2,500 less than you earn every month. The most effective way is to make frugal decisions on your most significant fixed expenses. Saving as much as $30K a year is not for everyone. If you're trying to figure out how much you should…
We all know we should save money, but how much should we save each year? In this article, I'll help you figure out how much you should save annually. I'll also give you a few examples with some cool charts and data tables. But first, here's the short answer: As a general rule, you should save 20% of your yearly income. More personally, you should save enough money every year to reach your long-term financial goals. For example, a 24-year-old wanting to retire with an annual income of $100,000…
Saving $8K in a year is no easy feat. It's a lot of money to stack up in a short time. Nevertheless, there are ways to make it substantially easier. Here's the short answer: To save $8,000 in one year, spend $666 less than you make every month. The most effective way is to cut down on your most significant fixed expenses like housing, and transportation. For a more general guide on how to save more money, check out this article: The 4 Steps To Save A Lot Of Money Fast Most articles offer…
Saving two thousand bucks in one year takes work. There are lots of ways to do it, and today I'll share what I personally did to start saving $2,000 (and more) every single year. Here's the short answer: To save $2,000 in one year, spend $166 less than you make every month. The most effective way is to cut down on your most significant fixed expenses like housing, and transportation. I actually used to live paycheck to paycheck. Moving out I only made roughly $1,200 a month. I barely got by!…
When I first moved out, I got by on roughly $1,200 a month. I don't miss the crappy apartment, the ramen noodles or the lack of a TV, but still, I look back at those times with a broad smile. Living on little builds character. But at some point, we all have to make some financial changes. After all, it's basically impossible to feed a family on less than $2K/month. Anyways... Let's get to the point: Yes, a frugal single person can live on $1,800 a month in most cities in the U.S. On average,…
Most people live on whatever they have. That's not a good idea. You should budget, live below your means and save/invest the rest. In this article, I'll help you figure out if you can live on $4K monthly as a single person or a family of four, depending on what city you live in, and what lifestyle you want. Let me give you a short and general answer: Yes, you can live on $4,000 a month. In almost all cities in the U.S., $4,000 a month is above the median cost of living (including rent) for…
Living on $3,000 can actually be pretty good if you do it right. It depends largely on where you live and your habits, as we'll see later in the article. Before we dive into the "hows" and the "whats", let me give you the short answer: A single person can live on $3,000 a month in almost any city on the U.S. Given a frugal lifestyle, one can expect to have over $1,000 left to save or invest each month. A family of four needs to be highly frugal to live on $3,000 a month. It is possible in…
I'll never forget my first apartment. It was 250 square feet of pure freedom. The feeling was kind of like falling in love - absolutely amazing! However, the initial freedom and love-like bliss soon turned into anxiety and terror - I hadn't saved up nearly enough. With roughly $1,000 in my account after the initial expenses and no paycheck in sight, I hopped on the infamous "ramen diet". I do NOT recommend it. Luckily, I landed a job as a telemarketer within a couple of weeks and got the first…
How much you can live on largely depends on your standard and where you live. If you want to live like a king/queen in Manhatten, $2K doesn't even cover rent, but if you move to Asia, $2,000 a month is awesome! But let's try to figure out how you can live, with $2,000 a month, in a few different cities in America. Here's the short answer: Yes, as a single person you can live on $2,000 a month. However, you will have to live frugally. Generally, you can not spend excessively on housing,…
Saving money is important. Securing your financial future has rarely been more necessary. Inflation is sky high, and there's turmoil in the geopolitical landscape. That being said, is saving $1,500 a month a good amount? Yes, saving $1,500 a good. It is roughly 6.5 times better than the average monthly saving of Americans. Given an average 7% return per year, saving 1500 dollars per month for 30 years will end up being $1,750,000. I use saving and investing synonymously in this article and…
Making $100,000 a year is a huge milestone. It's a popular target in terms of salary, and understandably so. In this article, I'll deep dive into: What lifestyle $100K/year affords for a single person and a family of four. How much wealth you can build. What luxuries you can afford. What people say it feels like. Here's the short answer to how good $100K a year is: Yes, $100K a year is good. After taxes and expenses, the average single person will have over $3K left every month, and a family…
Moving out is a major milestone and should be well planned. It is one of the first big decisions you'll make as an adult, and hopefully you've been saving up for it. I made the mistake of moving out with too little money, and I hope to help you avoid doing the same. Today, I’m gonna help you figure out if $7K is enough for you to move out: Yes, $7,000 is enough to move out. It will cover the security deposit, rent and expenses for a few months, and give you time to land a job. Technically…
So you're thinking about moving out? That's great, and you should! When I moved out, I only had $1,000 saved up, which was far from enough. Now that I've got more experience and knowledge about personal finance, I'm trying to help people avoid my mistakes . So, is $15K enough to move out? Yes, $15K is enough to move out. It will cover the security deposit and several months of rent and expenses. It will provide enough time to land a decent job covering your monthly bills. Of course, the answer…
Moving out is a huge deal. It's a major milestone and should be well planned. I made the mistake of moving out with too little money, and I hope to help you avoid doing the same. Today, I'm gonna help you figure out if $2K is enough to move out: If you already have a job, $2,000 is enough to move out. However, it is risky. You should consider saving at least $5,000 before doing it. If you want to save more before moving out, check out my complete guide on how to save more money fast. If you're…
$20,000 is a lot of money that takes discipline and time to save up. If you have done it, be proud of yourself! But, is $20K enough to move out? Yes, $20,000 is enough to move out. It will cover the security deposit , several months of rent, and expenses. It will keep you floating while looking for a stable source of income. Now, this topic is nuanced, and it depends on several factors. In some cases, $2,000 is enough to move out. For others, $2,000 is less than the monthly rent! Oh, and if…
I will never forget the day I moved out of my parent's house. I was eager and couldn't wait to get out into the world. But I hadn't saved nearly enough to move out yet! With roughly $1,000 in my bank account and no secure job in sight, I was in a bad situation. I exclusively ate ramen because I was terrified of going broke. Luckily, I landed a job rather quickly and made it! Today, I will tell you everything I learned from this mistake in hopes that you'll avoid it. Here's the short answer to…
We're told to save roughly 20% of our income to ensure a comfortable retirement. But on average, people save closer to 5% of their income. (source) There have been times in my life when saving anything felt impossible. Frankly, I was going deeper into debt every month. How are you supposed to save money when you're barely able to pay the bills? In fact, 64% of Americans live paycheck to paycheck , not being able to save money due to high bills. (source). With rising inflation, this problem is…
We all know saving money is important. There are tons of ways to do it, and today I'm going to answer some questions about how often and when it's best to save money. Here's the short answer: You should save at the same frequency as you're getting paid. For example, if you're paid monthly you should save each month. Technically speaking, it doesn't really matter how often you save. The only thing that matters is how much you save (within a given timeframe). For example, saving $1,000 a month…
Inflation is making your money worth less, which is why you need more of it every year. But, is saving or investing the best way to deal with inflation? First, here the quick answer to "save vs invest during inflation": Historically speaking, a combination of saving and investing is best during high inflation. Invest for the potential upside and save to minimize the risk of the investing. Now, let's dig a little deeper. I find inflation interesting and think questions like this are important…
Inflation sucks. We're all slowly drowning, and there's nothing to do about it... Or is there? In this article we're looking at the current inflation, and how different assets have performed relative to inflation. I will give you two reasons to invest during inflation, but first, here's the short answer: Historical evidence suggests that investing can make sense during inflation. Most major asset classes outperformed inflation in the periods examined here. And, in the major inflationary…
Inflation is a slow killer. If you're like me and feel the need to "do something about it", this article is for you! Today I'm trying to explain why saving money makes sense, even though inflation is slowly drowning us all. Saving money during inflation is smart because after the inflation there will likely be a recession, in which cash is king. In addition, inflation devalues your safety net, so you should keep saving every year to maintain it. I know it's hard to save money, especially if…
Saving money is all about consistency. Sure, saving $10K for a couple of years is good, but the real magic happens when doing it for a couple of decades. In this article, I'll do some good ol' math and look into the question, "is saving $10,000 a year good?": Yes, saving $10K per year is good. At an assumed 7% annual return, it could grow to one million dollars in about 30 years. I'm assuming that you're investing your savings into a passive index fund rather than leaving it all in cash…
Saving $100 is not as easy as it might sound if you're not earning a lot of money. However, it's far from impossible. Yes, saving $100 per month is good. At an assumed 7% annual return, investing one hundred dollars per month for 28 years grows to roughly $100,000. This article works through the assumptions and the historical strategy I used.
Saving $300 a month is a great accomplishment. Yes, saving $300 per month is good. At an assumed 7% annual return, investing three hundred dollars per month for 35 years grows to roughly $500,000. This article works through the assumptions and the historical strategy I used.
I will never forget the struggle of reaching the point of saving $500 a month. Yes, saving $500 per month is good. At an assumed 7% annual return, investing five hundred dollars per month for 37 years grows to roughly $1,000,000. This article works through the assumptions and the historical strategy I used.
Personally, I'm looking to retire in Norway (not a huge shocker as I'm Norwegian). In this article, I'll tell you exactly what you need in order to do so. I'll lay down my personal plans, and how much money I will need to retire in Norway. The minimum amount you need to retire in Norway is $800,000. This gives a "wage" of $40,000 per year at a 5% withdrawal rate. To live with a median Norwegian wage, and have a 4% withdrawal rate, you need $1.75 million. Now, this question deserves a detailed…
I still remember when I finally managed to save $1000 or more per month consistently. But after the initial excitement, the question arose: Is saving $1000 per month good? Yes. At an assumed 7% annual return, investing a thousand dollars per month for 20 years grows to roughly $500,000. This article works through the assumptions and the historical strategy I used.
