DISCLAIMER: I am not a financial advisor and this should not be taken to be financial advice. You should consult a financial professional for advice. I am a financial amateur. These are my thoughts and opinions on money that I have recorded here for my children, with the hope that my thoughts might help them. They are responsible for the results of the advice they choose to follow. Always worth keeping in mind: Past performance is no guarantee of future results. Your mileage may vary. The map is not the territory. Keep your eyes open. Smell it before you take a bite.
To my children:
How much of your income should you save? Well, ideally, all of it. You have to buy food, shelter, and clothing, but after that, there aren’t many necessities and you could save a lot of money if you didn’t buy things that you don’t really need. You don’t need to buy a soda at lunch, you can just drink water. You probably don’t need to buy a bag of chips either. You don’t have to eat lunch out, you can make it at home. And so on.
This may not be that exciting and if it starts to feel less like life to you, then by all means, spend your money however you want to. It’s your money and you earned it. But if you’re trying to retire eventually or retire early, then you’ll need to save some money along the way. I think saving as much as you can is a good approach. It seems better than saving 10% of your income because that just sounds like an arbitrary number. Why would you spend 90% of your income if you didn’t need to? Don’t save some and spend the rest—spend some and save the rest.
Saving is the way to retire early. Do you want to retire 10% earlier or as soon as you can? If you want to retire as soon as you can, then save as much as you can.
Bottom Line: Save as much money as you can retire comfortably or even early.