Use Savings Rate as a Lifestyle Inflation Canary

Hi Adam,

Thanks for sharing – and love the idea of the trailing 12 month savings rate – it’s something I haven’t really looked at before, only what my last month was, but not the overall change. I will be adding it to my spreadsheet!
Cheers,
FiL

Awesome, glad you found it interesting! Be curious to see what your findings are once adding that in.

Dave @Married with Money

I love this. I always thought that savings rate was good, but seeing it trend on a graph really makes it click. I think I’ll do the same!

Awesome, thanks! I’ll be curious to see your takeaways after seeing it visualized.

Church

I just calculated and got similar result. The good news is that I was in positive savings territory. The bad news, I let consumerism get the bets of me at times.

Great exercise! Thanks for sharing.

Ahh nice. Did yours have a ton of wild swings month to month too? I’ve found that to make it more difficult to understand this without seeing the trailing 12 month trend line.

Church

Yes, sir I did experience wild swings primarily due to the timing of incentive compensation payouts, irregular spending months, taxes et al.

It certainly brings it more into perspective by doing it your way.

Joe

Those negative months really bring down the average. At least now you know. Good luck bring your SR back up!

Thanks Joe! On the bright side, I added in July and it’s already trending up since then. Hoping to get back up to a consistent 50% like last year.

Mrs. Farmhouse Finance

Oooo I really like this idea! With a graph like this you can clearly see how you’re doing each month. Sometimes we convince ourselves that we’re saving more than we actually are, so this would keep us honest and on track with our goals.

Thanks! I was convinced my SR was higher than it was. Definitely cleared things up.

Alex

I’ve used the 6mma, it’s a little more responsive, but eh, who knows – maybe the smoothness of the 12mma is better. Anyhow, I do like this output because it’s hard to see trends from such noisy data and a total trendline takes outdated numbers into consideration and isn’t as helpful.
Also, because I like nitpicking… your savings graph clearly shows numbers below 0, then you say a “savings rate” is between 0 and 100%. If you’re spending savings and didn’t make much in a month the negative range is almost unlimited 😛

Ohh, that’s a good catch! I added another mention about when it’ll be below 0% (when dipping into savings).

I like the 6mma on this too. I added this to mine and it would call out differences notably faster than 12mma. Thanks for the recommendation! https://cl.ly/421A1h0n350h

[1] https://www.mustachianpost.com/blogger-savings-rates-index/

Hi Adam,

Smart decision about your savings rate over the last 12 months!
We happen to do a small competition in our #BSRI [1] club to keep us motivated, feel free to join it!

Also, I find it interested that your blog is about the intersection of these 3 topics that I cherish (min, mind, FI). I’m currently reading a book about the stages of human consciousness and I plan to write an essay about how I relate it to all these cited topics.
Did you already read about such a high level point of view? If yes, I would be interested to share on the topic.

Cheers,
MP

The competition idea sounds like a good commitment device/motivation tool for sure. I’d lean towards competing against my past self, but I see how it could be useful for sure.

Ohh, what’s the book you’re reading? I’d be curious to check it out. I feel these three topics are highly related but haven’t yet gone too deep into writing about yet.

Most of my take on these topics is highlighted at a high level in my about page.

August 16, 2017

The book is “Reinventing Organizations”.
I’ve read your about page, hence the initial question 😉

I will let you know if/when I’ve done my own research article.

Cheers,
MP

August 17, 2017

Ah nice! Yeah I’d love to hear it. That book looks interesting too — added it to my to-read list.

Steven @ The 1000 Lives

What a great way to put yourself in check!

I read a study one time on whether people felt that they were better driver than the average person. Something like 80% of people thought that they were an above average driver!

Perhaps those that pursue saving significant amounts of money feel the same way, and believe that they are doing a better job than they are! I will definitely use it to see how my family is saving over time.

Sounds about right, if framed as “80% of people think they’re saving more than they used to”. Up until seeing these numbers I would’ve been in that category as well!

Zack

September 13, 2017

Great idea on smoothing the savings rate average! I just started tracking my savings rate 3 months ago, so this is very relevant to me…. I just need to get enough data to smooth!

Did you say you are counting paying off debt as an expense? I am counting this as savings and counting when I actually accumulate the debt as the expense. This way of tracking rewards paying down debts and punishes the actual purchases that create the debt.