Category: Saving

How much should I save?

The national personal household savings rate has recently increased from 7.6% to 8.1% – still a far cry from the all-time high of 20.6% in 1973.

We often hear 10% floated around as a savings goal to target. But Jacob Lund Fisker, of Early Retirement Extreme, has a unique perspective on savings.

If you save 10% of your income each year, meaning you spend 90%, at the end of 9 years, you will have amassed the equivalent of 1 whole years’ expenditure.

Effectively, you can buy your own long service leave through this plan – imagine a year off work, all expenses paid, every 9 years!

Let’s take it to the next step though.

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How much is enough?

‘How much is enough?’ is something we ask ourselves in relation to lots of things – how much money do we need? How much free time? How much should we eat or drink? These are the sorts of questions I ponder a lot, so it was with great excitement that I encountered Arun Abey and Andrew Ford’s book How Much is Enough.

One of the first reflection questions in the book is ‘How much money is enough? Why? And how do you know?’

This is a question I could not have answered when I first started reading the book over five years ago, but now is one I feel I can do some justice to – ironically, thanks to yet another book.

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How can experts influence our money decisions?

Our ways of speaking about money, and using money, are intimately tied. So can the language of financial experts influence our money decisions?

Linguistic Relativity, also known as the Sapir-Whorf hypothesis, states that the structure of a language influences its speakers’ world-view.

The philosopher (of mathematics, mind and language) Ludwig Wittgenstein’s theory of language as the means by which people both picture reality and reason famously concludes ‘Whereof one cannot speak, thereof one must be silent’.

In other words, in order to be able to talk about money, and make effective decisions about money (key aspects of financial literacy), we need to understand the language of money.

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