💰 What Is the Savings Rate Rule?

Savings Rate = (Annual Savings ÷ Annual Income) × 100

It’s the percentage of your income that you don’t spend — and instead invest, save, or put toward financial goals.

The Simple Formula:

Savings Rate (%) = [(Income – Expenses) ÷ Income] × 100

For example:

You earn ₹20L/year and spend ₹12L → Savings Rate = (8 ÷ 20) × 100 = 40%

🎯 Why It Matters More Than Returns

Even with average returns, a high savings rate speeds up your journey to financial freedom. Here’s the classic FIRE (Financial Independence, Retire Early) logic:

Savings Rate	Years to Retirement (Assuming 5% returns)
10%	51 years
25%	32 years
40%	22 years
50%	17 years
65%	10 years
75%	7 years

Yes — you can retire in a decade if you save 65–75% of your income and invest it wisely.

🔑 The Real Power of the Rule

It’s not just about how much you earn — it’s about how little you need.

“You don’t get rich by earning more. You get rich by needing less.”

🧠 How to Improve Your Savings Rate

1. Automate Savings – Invest first, spend what’s left (not the other way around).

2. Cut Lifestyle Inflation – Every raise shouldn’t lead to a new EMI.

3. Track Monthly – Use a simple sheet or app to watch your real-time savings rate.

4. Live Like You're Financially Free Before You Are – It’s not deprivation. It’s discipline.

   
   

✨ Freedom Lens: Savings = Freedom Units

Every ₹1 you save is a soldier working for your freedom.

So flip the mindset:

“I’m not saving money. I’m buying back my time.”

🔁 Combine It With Other Rules:

• Savings Rate Rule = How fast you build wealth

• Passive Income Rule = When you can live off your wealth

• Net Worth Rule = Are you where you should be

• 25x Rule = How much you need to be fully free

  
  

All roads lead to one goal: Time freedom + peace of mind + purpose-driven life.