THE GLOSSARY · SAVINGS
Savings rate
The share of your net income you do not spend. The most predictive indicator of where you are heading — and the easiest to dress up.
By the Yoseri News desk · · 1 min read
Savings rate — what you set aside divided by your net income. On $800 saved out of $4,350 of income, the rate is 18.4%.
It is the most predictive indicator of your financial trajectory, ahead of the return on your investments. Over ten years, saving five points more weighs heavier than earning one more point of return — and it is the only one of the two variables you control.
Three traps make it misleading. Counting it on gross income makes it look lower than it is. Including the principal repayment of a loan makes it look higher. And working it out on a single month says nothing: it is a rolling twelve-month average that means something.
In Yoseri, this rate is read on the Savings and goals page, with a breakdown of what it funds: the cushion, the dated goals, the investments.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority.