Savings Rate

You get paid, but your employer is withholding some of your money for taxes. Then you’re left with your personal income, the money you actually make and get to spend...or save. Sure, spending is more fun than saving, but you have lots of savings options, too: savings accounts, IRA accounts, or personal investment accounts. If you’re actually saving (like a reasonably risk-averse investor) and not gambling (like a timing-the-market trader), it counts toward the savings rate.

The savings rate is the ratio or percentage of money you save out of your personal income. If your after-taxes paycheck is $4k and you put $1k into savings, your savings rate is 25%, or 1:4. In the U.S., the savings rate is usually well under 10% though. In China, it’s closer to 30%.

Your savings rate will probably change over time. Bull market? Spend, spend, spend—drinks on us! Party time on the boat. Recessionary bears plummeting the market? Save, save, save—you never know when your job might be cut.

Jaws has arrived to the party, making everyone act a little differently.