I just listened to the Bogelheads On Investing podcast interview with JL Collins, Episode 053. I am a big fan of JL and his book, Simple Path to Wealth, is what led me to Bogelheads and index fund investing.
During the interview, they discuss FIRE and financial independence and he suggests a rule of thumb of saving/investing 50% of your income after taxes. I have heard this number elsewhere too.
As a middle-class family of 4 (2 adults, 1 young adult child who is mostly independent, and a 1-year old baby), I find this figure almost impossible to reach. For example, our after-tax household income is about $8,000 per month ($120-130K per year gross, $96K net). Our fixed expenses alone, including our mortgage, utilities, insurances, two subscription services, and childcare are $4,000. We live in a MCOL area and are completely debt free other than $65K left on our home mortgage. Our current savings target is 20-30% of our post-tax income, which is a struggle to meet.
What gives? Is this level of savings only for high-income earners?
During the interview, they discuss FIRE and financial independence and he suggests a rule of thumb of saving/investing 50% of your income after taxes. I have heard this number elsewhere too.
As a middle-class family of 4 (2 adults, 1 young adult child who is mostly independent, and a 1-year old baby), I find this figure almost impossible to reach. For example, our after-tax household income is about $8,000 per month ($120-130K per year gross, $96K net). Our fixed expenses alone, including our mortgage, utilities, insurances, two subscription services, and childcare are $4,000. We live in a MCOL area and are completely debt free other than $65K left on our home mortgage. Our current savings target is 20-30% of our post-tax income, which is a struggle to meet.
What gives? Is this level of savings only for high-income earners?
Statistics: Posted by vanuber — Wed Aug 14, 2024 9:47 am — Replies 18 — Views 649