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Know Your Savings Rate

When you know your savings rate and income, you can get a pretty good idea of when you will reach financial independence.

A savings rate is the percentage of income that an individual saves and does not spend. It is calculated by dividing the amount of money saved in a given period of time by the total income earned in that same period of time. The savings rate is an important financial metric as it provides a measure of an individual’s ability to live within their means and save for the future. A high savings rate is typically considered a positive indicator of financial health, as it allows individuals to build an emergency fund, save for long-term financial goals, and prepare for retirement. The recommended savings rate can vary depending on factors such as age, income, and personal financial goals, but a general guideline is to aim for a savings rate of at least 10-15% of income.