Mr. Frugalwoods and I finally did the arithmetic on our 2014 savings and expenditures (as I’m sure you’re all relieved to know). While in any given month of 2014 we vacillated between saving 65%-82%, our average savings rate for all of 2014 is 71.4%. Woot!
How did we determine this savings percentage for the year? I’m so glad you asked! Turns out, that simple number is pretty complicated behind the scenes. There’s no “right way” to calculate your savings, but here’s the Frugalwoods methodology:
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Calculate our annual change in liquid net worth. Take the balances of our checking and taxable brokerage accounts on December 31, 2014 and subtract the balances as they were on January 1, 2014.
- Subtract any major non-salary inputs. For us this includes investment appreciation (or depreciation!) and our decently sized tax refund from our 2013 taxes.
Continue reading Well Hot Damn, Frugality Works! Our 2014 Savings Rate Revealed. at Frugalwoods.