Shockingly simple math money mustache driver#

This was achieved not through luck or amazing skill, but simply by living a lifestyle about 50% less expensive than most of their peers and investing the surplus in very boring conservative Vanguard index funds and a rental house or two. Then they retired from real work way back in 2005 in order to start a family. He and his wife studied engineering and computer science in Canada, then worked in standard tech-industry cubicle jobs in various locations throughout the late ’90s and early 2000s. Money Mustache is a thirty-something retiree who now writes about how we can all live a frugal, yet awesome, life of leisure. It’s not often in life that a relatively small change has such great benefits in the short run and such positive life changing effects in the long term.Optimal Living Daily: Reading you the best content on personal development, productivity, and minimalism.Įpisode 36: The Shockingly Simple Math Behind Early Retirement by Mister Money Mustache of (How to Retire Earlier). With a savings rate of 60 %, each work year “buys” one and a half years of freedom! Whereas a savings rate of 50 % enables you to become financially independent in around 17 years, a savings rate of 60 % requires less than 12 years. only about some few thousand dollars in additional savings per year. Why is an increase from 50% to 60% such a big deal? After all, we are talking about “just ten percentage points” resp. Today (February 2017), our savings rate is well above 60%. In 2011 our savings rate reached 50 % for the first and we managed to go even further. Mackanin and his wife, Nancy, have been married to each other for a long time. The savings rate shows you, how much freedom one work year can “buy”.Īs you can see on the graph above, we have been tracking our savings rate since 2006 and consistently increased that rate over time. Mackanin Wife : What Is He Doing Now Coming into his personal life, Mackanin is a married man, and now he lives a low-key life with his family. Your wealth snowball grows but not quickly. Money Mustache is the inspiration for countless FIRE journeys, and his post, The Shockingly Simple Math Behind Early Retirement, is a must-read for. With a 10 saving rate, you need to work for 50 years to save enough to afford to retire.

Money Mustache has famously referred to as the shockingly simple math behind early retirement. This is the lever that one can directly have an influence on. The Shockingly Simple Math of the Wealth Snowball.

Shockingly simple math money mustache driver#

The key driver in any wealth accumulation process is a systematic approach to consistently keep spendings under control. to make a sabbattical) or let’s put it that way: for each work year, one buys one “freedom year”. Well, one could (theoretically) take every second year off (e.g. It’s a high rate showingĪnd the other aspect of a 50% savings rate? For every dollar earned, 50cts are consumed and 50cts will be saved. Let’s assume a household with a savings rate of 50 %. how much can you live on (how many years required to reach Financial Independence)?.what percentage of your income do you take home? and.There are two key information you get from your savings rate: I don’t want to spoil it and I recommend that you check it out. Money Mustache wrote an article entitled, The Shockingly Simple Math To Early Retirement. There I referenced an article that I read that blew my mind. That article was a real eye-opener for me. I wrote about a similar topic on my blog in 2018. The relationship between the savings rate and the number of years one has to work before reaching Financial Independence and being able to stop working has been brilliantly described by Mister Money Mustache in his blogpost The shockingly simple math behind early retirement. He and his wife studied engineering and computer science in Canada, then worked. Later, we looked at one of the most popular metrics in personal finance: Net worth.Again we noticed the importance of your savings rate. There will be a definite time frame you have to work.Īnd no! You don’t have to be a millionaire to become financially independent! Episode 36: The Shockingly Simple Math Behind Early Retirement by Mister Money Mustache of (How to Retire Earlier). Money Mustache’s shockingly simple math behind early retirement, we observed that your savings rate is the most important factor in retiring early. Track you spendings, slash your fixed cost block, avoid discretionary consumption, work hard to increase your income, invest wisely et voilà: This is his most famous posting, and I believe it is even. It’s not as difficult as you might think to reach financial independence and retire early. If you spend everything you earn if you have no profit, no profit margin youll never be able to retire. Your savings rate is the the key factor if you want to shape your finances, gain financial flexibility in your life, being able to invest and build up an ever growing passive income stream in order to reach Financial Independence in a reasonable time frame. Money Mustache lays it out in this article. The Shockingly Simple Math Behind Early Retirement.