Knowing how to calculate your savings rate is one of the first steps in your journey to financial freedom. More and more millennials want to achieve financial freedom because they don’t see themselves working their entire life until retiring.
The formula to calculate your savings rate is straight forward. Savings / Income = Savings Rate Percentage. In other words, it is equal to your savings divided by your income.
However, defining savings and income is more complicated than what most people anticipate. There are a few nuances that can lead you to create a false savings rate calculator.