Proverbs 21:5 tells us Steady plodding brings prosperity; hasty speculation brings poverty. But if you have a really big financial goal in mind, how do you know if you’re plodding enough? Whether you’re saving to buy a house for your child’s education or for the day you retire, a simple formula can help you determine if you’re on track. We’ll discuss that today on MoneyWise.
Sometimes you’ll hear that the journey is half the fun of arriving at your destination, but that’s not the case when we set financial goals, is it? We want to get there as quickly as we can.
Knowing how much you’re actually saving and how much you’re spending could help you funnel more money into your savings plan and speed up the process.
And you can find that out by figuring your savings rate.
YOUR SAVINGS RATE
Figure out your savings rate - the percentage of income you're saving every month:
-Determine your total monthly "take home" from all sources. -Figure out your expenses - how much you're spending each month. -Add your non-discretionary monthly expenses. -Add everything else - your discretionary spending. -Subtract your expenses from income. Divide that number by your income. Multiply that by 100. That is your monthly savings rate.
Knowing your current savings rate will help you determine if you’re on track to meet your goal in the time you have remaining.
To increase your savings rate, you’ll have to go back over your discretionary spending to see where you can make cuts.
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LISTENER QUESTIONS On today’s program, Rob also answers listener questions: ●What is a donor advised fund and how can that be used for tithing? ●How much is enough to retire on given current inflation? ●What are your healthcare options if you’re self-employed? ●When does it make sense to drop life insurance? ●How do you determine whether you need a trust or just a will? ●How does it work when you trade in your car with negative equity (still owe money on your trade-in vehicle)? RESOURCES MENTIONED ●CHministries.org Remember, you can call in to ask your questions most days at (800) 525-7000 or email them toQuestions@MoneyWise.org. Also, visit our website atMoneyWise.orgwhere you can connect with a MoneyWise Coach, join the MoneyWise Community, and even download the free MoneyWise app.
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