MONEYMONK WEEKLY MESSAGE 13/2019
Savings rate and
saving amount
Many people do not
have adequate funds on retirement and are thus deprived of reaching their
Financial Freedom due to a common mistake they make despite them increasing
their savings gradually.
This mistake is in
not realizing or knowing the difference between ‘the saving rate’ and
‘increasing the saving amount’ Let me explain with an example.
Person X
Starting Salary
50000 savings 10000 Savings rate 20%
Salary increase in
a few years
New salary 100000
savings 15000 Savings rate 15%
Drop in savings
rate is 5 % despite increasing savings but the drop in savings rate
percentage is 25 % (from 20% to 15%).
Why this affects
adversely is because unknowingly one has increased ones expenditure or living
standard. One is bound to find ones retiring funds inadequate and attaining
Financial Freedom can be missed if this continues.
Please make sure
that your ‘savings rate’ is maintained as you progress in life to ensure a
comfortable retired life and eventually attaining Financial Freedom !!
Note:
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