I think whenever these articles surface, they're referring to total savings (liquid savings + retirement). It doesn't make much sense to me to have double my salary making no interest in a low yield savings account.
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"By 35, You Should Have Double Your Salary Saved" - Do You?
- Thread starter BWoog
- Start date
I think whenever these articles surface, they're referring to total savings (liquid savings + retirement). It doesn't make much sense to me to have double my salary making no interest in a low yield savings account.
Absolutely. You're already living an acceptable lifestyle, so why change it? Invest your raise instead of spending it. Your lifestyle doesn't change at all and you improve your financial future significantly.
I thought it meant monthly salary and thought sure, easy. But annual? Sorry but that's insane, unless you've worked for the same salary and lived with the same expenses since turning 25. I'm 30. I finished school roughly 2 years ago and have about two monthly salaries in cash and another in bonds. Everything else I've earned has gone into establishing a life. Things like getting an apartment, getting a car, getting furnishing for the apartment.
Not to mention that my salary has been on an exponential trend which will continue for the next five years or so. I started at 41.5K, am now at 65K (average) and should plateau at about 100K in 5 years, minimum (pre-tax). How, exactly, am I supposed to save 200K by then, seeing how it would take me close to 3 current yearly salaries alone, starting now, to get there!?
I get saving for retirement, but blanket advice like that is stupid. Just come up with a realistic savings plan and account for reality. I'm holding off on long-term savings altogether for now because I'll hit my next pay bump in november and move up to around 80K, so saving before then feels rater moot. After that, I plan on putting a substantial amount of my pay raise into savings, starting with a liquid buffer of 3 monthly post-tax salaries (about 13K) and moving on to long-term investment after that.
Not to mention that my salary has been on an exponential trend which will continue for the next five years or so. I started at 41.5K, am now at 65K (average) and should plateau at about 100K in 5 years, minimum (pre-tax). How, exactly, am I supposed to save 200K by then, seeing how it would take me close to 3 current yearly salaries alone, starting now, to get there!?
I get saving for retirement, but blanket advice like that is stupid. Just come up with a realistic savings plan and account for reality. I'm holding off on long-term savings altogether for now because I'll hit my next pay bump in november and move up to around 80K, so saving before then feels rater moot. After that, I plan on putting a substantial amount of my pay raise into savings, starting with a liquid buffer of 3 monthly post-tax salaries (about 13K) and moving on to long-term investment after that.
Different mindsets I guess. My wife bought a house we could easily afford. It's 1800sq ft for 2 adults, and 2 kids, and a dog. We can easily afford a way bigger place, but we're saving money hand over fist and also able to go on some nice vacations.
I just don't personally understand why people overextend themselves with huge mortgages. Our house is almost paid off and we're both under 40.
Am 34 for another month. Nearly have a full years salary in my PERS (retirement) before my employer match.
I'll be 35 next year. I went back to school to get an MBA a few years ago, and used most of my savings then to pay for it. After graduating, I've more than doubled my pre-MBA income, and I've bought a house. So, if I count my 401K and the equity I've put into my house, then... no, still no.
This is fantastic advice, do it now. It makes a HUGE difference.
We upgraded from a 1600sq ft house to a 2800 sq ft house. We went from 1 to 3 kids (twins). We also live in a desirable neighborhood with a ton of really nice amenities. We're a single earning family, so I don't think we're extending ourselves that much. We pack away money each month through general liquid assets and via my 401k.
On the flip side, I know people who pack every single nickel away and argue over bills when they go out to restaurants. It's obnoxious to be that level of penny pincher. It's good to find a happy medium.
I would have had round about that much saved by 35 had we not bought a house recently (which means I am not indebted instead and will be until at least when I'm turning 40 in 10 years). But this is rather arbitrary and not possible for many many people. I had to be quite the stingy person (on personal expenses) to make this possible and I earn quite fine (slightly better than average for my age/ethnicity/sex bracket in the US per the thread a week ago). For people earning minimum wage or slightly above, no level of greed will enable them to do that.
Yeah, I can see twins forcing the house size issue. We're almost at capacity in our house but my mindset has been to just start getting rid of stuff instead of finding a bigger home to fill up with more crap. I'm looking for mostly experiences for me and my family, and not so much things. I have friends who make around the same money and their houses are almost triple what mine is. It's just mind blowing to me.
But we definitely don't penny pinch either. We don't even have a set budget. I'd really like to do one just to see where I'm at and see if there's any non-obnoxious efficiencies I can make. For the time being, I've started making my own lunches for work and it's making a noticeable difference. I've also made a small game/hobby out of trying to fix things myself (think lawnmower, snowblower) instead of throwing it out and buying a new one.
I forgot to submit my previous post, but this article is based on reasonable guidelines and doesn't cast any particular shade on anyone who hasn't met the milestone, if anything it goes out of its way to highlight why someone may not.
Its useful as a discussion, both publicly and privately about techniques to save. If you opt to not save or are unable to do so, thats OK too, so long as you are making consciously making decisions rather than being uninformed.
And. . . No I dont meet that milestone.
Its useful as a discussion, both publicly and privately about techniques to save. If you opt to not save or are unable to do so, thats OK too, so long as you are making consciously making decisions rather than being uninformed.
And. . . No I dont meet that milestone.
I really wish I was better with being able to fix things on my own and not having to be so reliant on hiring people. I really could see myself doing this, but my kids are all 5 or under and they demand all of my attention and time when I'm not at work, it makes it impossible to do anything handy. Eventually they will get older and I can do these types of things. Also, having to pay for preschool is such a money suck, but it's worth it. Pretty sure most of my money issues are because of my kids :)
Yeah, I have two kids under 5 in preschool and I hear you on the finding time. My wife and I actually bicker over who gets to do housework/chores versus keeping an eye on the kids.
Though my 5 year old daughter is eager to help, so I let her unscrew things on the lawnmower etc. I figure at least she can learn a few things while I'm getting stuff done. I try to actively involve them if it's safe enough for them and they won't get in the way too much.
Also I think this is talking about saved in retirement savings, correct? Not just saved in a regular savings account. Very few have double their salary in normal savings. I don't have close to double in retirement, but I have it moving at least.
To me, even as someone who comes from a pretty solid middle class background, this seems kind of difficult to do honestly unless you have zero debt + a spouse/partner to offset expenses + well paying jobs with good benefits + start your career early, with minimal setbacks and good compensation.
I actually just signed up to start contributing to my current job's 401k, but I've been here two years. I'm contributing 8% of each paycheck, but I wish I could do more. I should have started immediately after becoming eligible (6 months of employment), but neglected to because the company stopped matching contributions right as I became eligible (dumb of me).
I'm 27, so the thought of getting to double my salary right now by 35 doesn't really seem feasible. I'm trying to pay down student loans, of which I still owe over 15k, and pay off my car (but it's 10 years old and I'm probably going to wind up needing a new one sooner than later, so more debt yay!).
I lived with a girlfriend the last two years so living expenses were halved for me, but now we've separated and I'm trying to figure out a decent living budget that covers all my expenses (housing+utilities, loans, investments, food, etc.). If the rough average of ~7% interest gained on your standard market investment plan, and you were contributing 10% every paycheck, it seems like it'd still take more than 10 years to get to double your salary...
I actually just signed up to start contributing to my current job's 401k, but I've been here two years. I'm contributing 8% of each paycheck, but I wish I could do more. I should have started immediately after becoming eligible (6 months of employment), but neglected to because the company stopped matching contributions right as I became eligible (dumb of me).
I'm 27, so the thought of getting to double my salary right now by 35 doesn't really seem feasible. I'm trying to pay down student loans, of which I still owe over 15k, and pay off my car (but it's 10 years old and I'm probably going to wind up needing a new one sooner than later, so more debt yay!).
I lived with a girlfriend the last two years so living expenses were halved for me, but now we've separated and I'm trying to figure out a decent living budget that covers all my expenses (housing+utilities, loans, investments, food, etc.). If the rough average of ~7% interest gained on your standard market investment plan, and you were contributing 10% every paycheck, it seems like it'd still take more than 10 years to get to double your salary...
I believe you're supposed to be including your 401k in this amount. I started contributing at the 23 of age when I first started for this company. I have about 80% of my salary saved, but right now, but my 401K contribution is taxed now while I'm using a my gross income amount without tax, so I'm probably doing better saving wise.
I've set my contribution at 13% as long as I can remember.
Student debt is my first battle though. I've made it past the half way point and my initial goal was to clear it all by the time I reach the age of 30, but that's not likely happening unless my crypto investments go crazy. Within the next three years seems likely...
I'll be happy if I at least able to get this balance low enough for interest not to hurt as much. The LIBOR rate has been increasing more significantly ever since Trump got elected and it's impacting my variable rate.
I've set my contribution at 13% as long as I can remember.
Student debt is my first battle though. I've made it past the half way point and my initial goal was to clear it all by the time I reach the age of 30, but that's not likely happening unless my crypto investments go crazy. Within the next three years seems likely...
I'll be happy if I at least able to get this balance low enough for interest not to hurt as much. The LIBOR rate has been increasing more significantly ever since Trump got elected and it's impacting my variable rate.
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There 7% number was in response to the quoted price. I wouldn't assume that for housing. Overall, my post was pretty narrowly tailored about the decision to pay down mortgage versus invest elsewhere.
But since I'm here...
Housing prices are less volatile than the equity markets but they don't have zero volatility. And their vol is exacerbated by the fact that most purchases are highly levered (with a mortgage).
Home ownership is certainly not best for everyone. And there is no reason to expect home ownership will be the same wealth generation engine it has been for the last 30 years since they've almost certainly benefited from the long term decline in rates. And that can't continue.
The interest is best thought of in terms of opportunity cost. If you fully equitized a home purchase you would need 5x the cash, which most people don't. If they did they may still elect to get a mortgage so they can invest in higher returning assets. Then your return is levered. You double your equity if the house price goes up 20% and likewise on the downside.
And the debt of a mortgage is offset by the value of the home. Unless you overpaid, which a lot of people did 12 years ago.
Even if you rent, you are still paying insurance and taxes, just not directly. Your landlord is charging you enough to pay their taxes, insurance, and earn a return.
Buy vs rent is a complex decision. The length of time you plan to stay in a place is also an important consideration. I rented for 12 years before recently buying, and as a homeowner I recognize rentings advantages.
I think we're talking about different things, or different amounts, rather. I didn't mean you could meet the 'double' amount being touted here. I certainly didn't. I mean saving in general, even modest amounts. Sorry if I was a bit general there.
I clarified above. Do you still think the same for any savings? Doubling does seem challenging, but doable (calamities aside). I don't feel like I made any huge effort until I was past 30, but modest spending and regular tucking away has very nearly got me there.
Double my yearly salary (we usually talk about monthly salary here in Sweden)? Before or after taxes?
In any case, no, I do not. Not 35 yet though, two years to go... Doubt I'll get there by then (in fact I'm sure I won't), but I'll be a good bit on the way. I know I'm saving a lot more than most people my age.
In any case, no, I do not. Not 35 yet though, two years to go... Doubt I'll get there by then (in fact I'm sure I won't), but I'll be a good bit on the way. I know I'm saving a lot more than most people my age.
I can't even buy a sandwich after medical school. Yes, it's the good life.
If anything that makes it more reasonable, unless you always let your lifestyle costs inflate directly with your salary.
I'm in the 50th percentile or so of that WSJ tool for white people with a bachelor's degree and I save about 20% of net income each paycheck (401k already taken out).
I don't know about you, but I haven't been in the active job seeking market for years. I lucked out and got into a good industry when i was 17, I'm 35 now. Just reading threads about how hard people are hustling to get entry level work is eye opening. People are driven enough to do 5-10 rounds of an interviews * multiple companies * student debt. Then combine that with how expensive everything is, and wages surely aren't skyrocketing. Rent is though. Yes, Id say its pretty hard for people to save money these days. Those like myself, are lucky as shit. I just started this year too... which is even crazier.. but we all have our sob stories.
I've known enough people that have been wrecked in their industries, unemployment only goes so far, so you have to dip into savings and likely tap it out. All anecdotal of course, but looking at the statistics for this country it seems likely that a good percentage of people aren't able to save money modestly, or work up a ladder in some industry. I can't say that everyone is working hard, but a lot of hard working people are getting the short end of that lucky stick. I mean sure it takes effort, but it also takes you having constant work.
They are definitely talking about savings in general (including savings accounts, retirement accounts, etc.)
If someone actually has double your salary in a savings account you're either doing it wrong or just super rich.
If someone actually has double your salary in a savings account you're either doing it wrong or just super rich.
I think I'm doing ok...in that I have no savings, but only 70k in student debt. Still, I'm not 35 yet...that happens next month.
I'd argue that anyone that has twice their annual salary just sitting in a savings account is doing wealth management wrong.
Put it towards your mortgage, investment property, stocks and grow it.
Put it towards your mortgage, investment property, stocks and grow it.
