Saving for Financial Independence

Saving for Financial Independence (June 25, 2012)

People are financially independent when they do not have a mortgage and have built a nest egg for retirement.

Guideline: The typical family should set aside 10% to 20% of their gross family income for mortgage payments and savings.

The allocation between mortgage payments and savings isn’t as important as saving the 10% to 20%. Many people prefer to allocate a larger % to their mortgage and then switch to saving once the mortgage has been paid off.

It’s important that that you automatically set aside the cash for this saving – while most people have automatic mortgage payments, the saving portion should also be automatically transferred to your savings account.

Next month we will talk about where to put your savings.

Resources:
The Wealthy Barber
Becoming Debt Free Faster