Understanding Your Savings Rate

The savings rate is the percentage of gross income that individuals set aside for future use, including investments and emergency funds. It's crucial for achieving financial independence, with a suggested target of saving 25% of pre-tax income. However, many people mistakenly interchange savings with everyday spending or short-term goals, which can dilute their long-term financial strategy. By maintaining an adequate savings rate, individuals can create necessary financial margins that ensure flexibility, security, and acceleration in their wealth-building journey.