The Number That Will Change The Way You Save Money
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- čas přidán 23. 10. 2022
- In this video, we'll go through what is the most important number that will determine how quickly you can reach financial independence. F.I. is less about being able to quit your job and more about putting yourself in a position to be able to have more control over your life.
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The most important number that will determine how quickly you can reach financial independence is your savings rate. This number is more important than what you invest your money into and the return on investment you receive. Your savings rate is calculated by taking your income minus your expenses and then dividing that number by your income. The reason this number is so important is that the more you're able to save and the less you're able to live on, the faster you'll be financially independent. The saving side of the equation is important but you'll need to find a healthy balance. While I think it's important to continue spending money on the things that are important, you'll want to make sure it doesn't get out of control. Ideally, you'll want to match your spending with your values. That way you're able to figure out what makes sense to spend money on and what makes sense to cut from your expenses. The other side of your savings rate is your income. This should be the main area to focus on because there is no limit as to how much money you make. Increasing your income can be done through a raise at work, getting a new job or position that pays more money, cash bonuses, or some sort of side hustle that you can do in your free time.
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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio. Always remember that incentives determine the type of advice they give you so one that charges an hourly fee is less likely to be problematic.
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I appreciate how focused and concise your content is. It’s thorough, but closes the gaps. I like how it’s not bogged down with long winded sponsorships and self promotions are extremely brief. 🙏🏽
I appreciate that!
I am currently at a 54% savings rate, but I am also working on building an emergency fund and a down payment fund for a home, so if we’re only looking at investing savings I’m at 33%. I am almost 30 and just now realizing I need to get serious about my finances, but videos like these really help me feel like I know what I’m doing. Thank you!
Sounds like you're doing great!
Keep it up 👍🫡
Time to increase my hours at work. I'm ONLY working PT. This makes sense. Thanks Jarrad
Couldn’t have said it better thanks
Hi Jarrad,
Very insightful video. Could you share the spreadsheet that you use to come up with calculations? Thanks!
Love the numbers about how small increases in income can get you to FI faster and faster. That was very powerful. Thank you ;)
You're so welcome!
Nice thumbnail. $100 equals $40,000 WOW that's bigger than I thought I was thinking $25,000. Even better for me then all my calculations will be better then. Its nice to know I'll have an extra safety net. I'm investing roughly 92% of my paycheck now. I'm definitely living one of the most frugal lives ill upgrade my lifestylein a little while maybe when inflation drops 😆. I believe I'm ready to retire but at this point I'm only working for the higher lifestyle. I get excited when you bring us a new video thanks for your hardwork!
When I saw the terd emoji, I knew it was time to quit dumpster diving once and for all. Thanks!!
😂
Thanks for the solid content. Do you count 401k employer contributions and all HSA contributions (yours and employer matches) to your savings rate?
This is a great question I’m wondering the same thing!
Good question. Since the employer match is technically a part of your monetary compensation (like your salary) then I'd consider it to be a part of your savings rate.
That's been one of my strategies for a while now: my savings rate is 54%.
Curious what you had the preface about you couldn't talk about health things on YT but you can on your podcast? YT Community Guidelines don't allow it?
Ad rates have been known to decline when certain topics are mentioned
Molly❤ the best hiker in the world.
Currently we are saving 30% and cash flowing my wife through nursing school and paying off debt.
She gets her RN in May and her income will almost double then she is going for her NP.
Once she gets her RN we can increase our saving to 50%. After she gets her NP we can supercharge our savings up to 75%. Save 100% of her income and 50% of mine. Maybe pay cash for a foreclosure every couple years and fix it up after the market corrects.
Assuming 7% returns:
At 30% we are on track to have $2 million in retirement in 20 years. Not really enough since I expect the value of money to be 30% of what it is today.
At 50% with my wife's salary increase in May it puts us around $3.5 million. Which I roughly expect to be equivalent to $1 million of today's dollars.
At 75% if my wife gets her NP that could put us closer to $7 million which would be one heck of a retirement. We would likely be looking to retire early in that scenario.
Beer is also number 1 for my budget
😂
Which sector do you think has the most potential: clean energy or electric vehicles? (Not financial advice)
Don't know and I don't really care 😂. I'll just buy the whole stock market and profit no matter which one goes up.
@@JarradMorrow 😂 I appreciate your honest answer. I always watch some video and tend to stray away from my plan. Thanks for bringing me back to reality.
You and me both to be honest 😂. Luckily I haven't actually pulled the trigger on tilting my portfolio away from my plan, but I'd be lying if I said it didn't cross my mind from time to time over the past handful of years.
Hi Jarrad. When I saw the thumbnail and the title, I thought the number you were going to talk about was the CAGR of your investments.
15%/year vs 10%/year on a $1,000/month investment could make a difference of $4.7 million over 30 years. I made a video on this so that's why I was biased towards that being the content of this video 😅
Great message and keep up the good work! You deserve the 300K subs you're looking for right now 👏
Yea, but you're assuming it's easy to outperform by 5% consistently, every single year, for 30 years. It's simple to plug those numbers into a spreadsheet, but a lot more difficult to successfully execute on that strategy.
@@JarradMorrow Definitely! All we have is the past record to plan for the future. However, I was not really talking about outperforming the market but rather about being it (through either S&P 500 or Nasdaq100). All the best!
Do you charge to be in your discord?
No, it's free
@@JarradMorrow thank you! Just applied
1:16 They still aren't
What about pretax pension contributions- as is possible in the U.K. …..
I live in the U.S. so I have zero clue what you're talking about
Im not gonna lie i blew soda out my nose reading Jared's comment
@@JarradMorrow
It's basically the same thing as a 401k; but with a different limit on the amount you can put in and a limit on the total pot size without tax penalties.
Ah, okay I understand now. Thanks for sharing the additional info. Hopefully there are good UK based content creators out there helping people with this sort of thing.
Prioritize ur SAVINGS RATE!!
👍🏻