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capebretoner
Joined: 02 Aug 2006
Posts: 82
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 Posted: Thu Jan 03, 2008 10:58 pm Post subject: How much do you save |
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How much as a percent of your income goes into savings? Both retirement and basic savings?
I am saving about 10% right now with another 5% going to service my debt.
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bbwalker
Joined: 19 Feb 2008
Posts: 11
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| Posted: Tue Feb 19, 2008 2:09 am Post subject: Re: How much do you save |
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| capebretoner wrote: |
How much as a percent of your income goes into savings? Both retirement and basic savings?
I am saving about 10% right now with another 5% going to service my debt. |
Depending on your situation it may be more economical for you to put 10% towards debt and 5% towards savings.
My rule-of-thumb is that if the debt is over 6% I pay the debt if it is less than 6% I save money. My wife and I currently have about 15k worth of debt that is financed at 4.99% or less. That is essentially free money because we are putting money in a savings account yielding 5.35% and other investments with a higher yield.
This may not work for you but if the rate on your debt is higher than 6% I would recommend paying the debt first and saving less. just my 2¢ |
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altyfc
Joined: 29 Dec 2004
Posts: 1232
Location: Aardvarkland
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| Posted: Thu Feb 21, 2008 10:01 am Post subject: |
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I pretty much spend all my earnings at the moment. That's because my company only pays me what myself and my family need to live on. Any surplus stays in the company for now.
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Wolverine
Joined: 06 Apr 2008
Posts: 36
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| Posted: Wed Apr 09, 2008 3:33 pm Post subject: |
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The rule of thumb I always thought was sound advice to follow was 20% of each paycheck - 10% investment/savings for any time, and 10% retirement. Part of the thinking is if you need to spend near 100% of your income every month then something is wrong because you are living above your means.
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altyfc
Joined: 29 Dec 2004
Posts: 1232
Location: Aardvarkland
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| Posted: Thu Apr 10, 2008 11:55 am Post subject: |
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But there are exceptions to that. I am spending 100% of my "pay" because I am only drawing from my company what myself and my family need to live off. This way, my company gets taxed (at corporation tax, which is lower) on the bulk of the profit, rather than me. The company can invest in shares, etc. just like I could if I'd drawn the money out.
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Wolverine
Joined: 06 Apr 2008
Posts: 36
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| Posted: Thu Apr 10, 2008 12:25 pm Post subject: |
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Yes, there are plenty of exceptions, that is why it is called a "rule of thumb" - it speaks to the majority of people who are not as slick as you. 
Bravo on that, by the way!
No doubt, setting up a corporation is a key thing to do to max out on write offs, using company equipment and all that, and paying less in taxes. I think Rich Dad Poor Dad covered that (good book).
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altyfc
Joined: 29 Dec 2004
Posts: 1232
Location: Aardvarkland
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| Posted: Sun Apr 20, 2008 9:52 pm Post subject: |
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Hehe... thanks.  I'm not familiar with that book (I guess it is a US publication) but I'm sure many of the same principles apply. Here in the UK, corporation tax is lower than income tax so there are significant savings to be had if you don't immediately require all your business profits.
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