The savings rate is the share of your income after you deducted all expenses:
- Expenses = 6’000
- Income = 10’000
- Savings = 4’000
- Savings rate = 40%
What is the savings rate for?
The savings rate is one of the most important performance indicator for financial freedom, its tells you if you are moving towards financial independence and if yes, how fast:
| Savings rate | Effekt | time until financial freedom* |
| negative | you are moving away from financial freedom | will not happen |
| 0% | you are not moving towards financial freedom | will not happen |
| 10% | you are barely moving towards financial freedom | 40 to 75 years |
| 20% | you are barely moving towards financial freedom | 30 to 40 years |
| 30% | you are moving towards financial freedom but you will need some patience | 23 to 30 years |
| 40% | you are moving towards financial freedom but you will need some patience | 18 to 23 years |
| 50% | you are moving towards financial freedom but you will need some patience | 14 to 17 years |
| 60% | you are moving towards financial freedom but you will need some patience | 11 to 12 years |
| 70% | you are moving towards financial freedom quite fast | 8 to 9 years |
| 80% | you are moving towards financial freedom very fast | 5 to 6 years |
| 90% | you are moving towards financial freedom at the speed of light | 2 to 3 years |