This is a graph of my savings rate over time. By savings rate I mean the simple formula: total amount saved / total amount earned. This will always be a percentage between 0% and 100% if you’re saving money, or below 0% if you’re dipping into savings. In my case, I consider anything unspent at the end of the month to be savings, so it’s not specifically money that was invested.
Each month I track this in a simple spreadsheet. This allows for doing the basic blue line here — SR over time. It varies wildly though. What’s not clear from this chart is vacations we had, honeymoons, a wedding, paying off some joint debt, paying off a new car and even a windfall (well the timing on the windfall is a little obvious).
When looking at this blue line, things seemed to be OK. I knew I was spending a little more lately, but nothing crazy right? I didn’t feel like I was letting in lifestyle inflation. I decided to try adding one more column to my spreadsheet around “trailing 12-month savings rate” which was an average of the SR from the 12 months before that given month.
When I graphed this line I was completely surprised by the result! I hadn’t been saving quite as much as I thought — and the trend wasn’t looking good. Doing this activity was great for helping me get a gut check and realize I need to reign in my spending a little. Looking forward to seeing that red line go up in the coming months.