1632: Why My 77 Percent Savings Rate Means Nothing by Paula Pant of Afford Anything on What Really Matters Instead

Optimal Finance Daily - Financial Independence and Money Advice

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Investing, Business, Education, Self-improvement

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🗓️ 28 August 2021

⏱️ 11 minutes

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Summary

Paula Pant of Afford Anything tells us why her 77% savings rate is meaningless Episode 1632: Why My 77 Percent Savings Rate Means Nothing by Paula Pant of Afford Anything on What Really Matters Instead Paula Pant is the founder of the award-winning website AffordAnything.com and a writer and speaker specializing in money, business, and real estate investing. She is a real estate investor, as the owner of seven rental property units in metropolitan Atlanta. She holds a real estate license in Georgia. She's also the host of the Afford Anything podcast. The original post is located here: https://affordanything.com/77-savings-rate-means-nothing/ With the SendPro software, you can compare shipping rates between carriers, plus save 40 percent off USPS Priority Mail shipping and get 5 cents off every letter you send. Our listeners can try it FREE for 30 days and get a FREE 10 pound scale, but only when you visit: PB.com/OFD. Please Rate & Review the Show! Visit Me Online at OLDPodcast.com and in The O.L.D. Facebook Group Join the Ol' Family to get your Free Gifts and join our online community: OLDPodcast.com/group Interested in advertising on the show? https://www.advertisecast.com/OptimalFinanceDaily Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is Optimal Finance Daily episode 1632. Why my 77% savings rate means nothing
0:08.2	by polypant of affordanything.com. And I'm your host and personal finance enthusiast, Diana
0:14.7	Mariam. This is a show where I narrate posts from thought leaders in personal finance every single
0:20.2	day of the year in 10 minutes or less. If you're someone who wants to keep good personal finance
0:25.5	practices top of mind, but you don't have the time to read all the various blogs out there,
0:30.2	then this is the show for you. And if you like this idea of reading blogs to you for free,
0:35.2	it'd be great if you could share this podcast with someone today. You can email or text someone
0:40.1	a link to OLDpodcast.com or even better if you're able to subscribe them to the podcast right on
0:46.4	their smartphone. That would be greatly appreciated. But for now, let's get to today's post as we
0:52.5	optimize your life. Why my 77% savings rate means nothing by polypant of affordanything.com.
1:06.0	Finance nerds have strange habits. Here's one of mine. Once a year, I lock myself in a room with
1:12.0	nothing but a laptop, spreadsheet, and boat loads of determination. The mission, decipher my savings
1:19.7	rate. Am I saving 30% of my income? 40%, 60%. As long time readers might recall, my then partner,
1:27.3	now X and I, saved half of our income in 2012. We did this by following one simple rule.
1:34.6	Pretend that we're a one-income couple. Live entirely on one partner salary and invest 100%
1:41.0	of the others after taxes. Since we earned roughly the same amount, we ended up investing about
1:47.1	50% of our income in 2012. In 2013, we didn't follow any strict rules about spending from one bank
1:54.2	account or the other, but both of our earnings escalated. And I suspected this might translate into
2:00.0	a turbocharged savings rate. After all, the best way to fast track your savings is by earning more
2:06.2	and saving every dime of that extra income. I crunched the numbers and made two shocking discoveries.
2:13.4	We have a 77% savings rate, and that statistic is meaningless. Here's why that factoid is
2:22.4	and how to find a metric that really matters. Measure the metric that matters.
	...

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