Sample Household Budget For Early Retirement: 85% Savings Rate!

The Hustle has an article on 30-year-old early retirees and it serves as a quick introduction to the concept of FIRE (Financial Independence Retire Early). For the most part, it profiles young tech workers and engineers with very aggressive savings rates. Here is the budget of a 28-year-old computer programmer in San Francisco who saves 85% of his take-home pay (over 91% of gross pay):

At first glance, isn’t the budget missing a few lines? Health insurance? Paid by employer, I assume. Transportation? No need for a car in the city, I assume. Utilities? I guess renting a room in a 5-bedroom can become quite a deal when splitting things that many ways.

On the other hand, how does $165,000 gross salary end up as only $91,000 take-home pay, even in California? His true saving rate might be even higher than stated.

Let’s forget the details. He makes a big salary, and spends very little. That’s all you really need to know. I don’t question the overall spending numbers because I also lived on less than $20,000 a year as a 20-something single person in a budget apartment shared with a roommate. Even that 165k income is simply about average for a tech worker, per Statista:

(If you are prone to salary envy, don’t poke around the tech worker salary comparison site Levels.fyi.)

I’m happy for Kevin, but is frugality only for the rich? No, I don’t think that is a fair statement. Now that I am older, I can estimate the income of my parents and can appreciate the lengths that they went to in order to manage our family without going into debt. You have to to believe that you can make a difference. I hate the suggestion that there is no point in trying, and that we have to wait for the politicians to save us.

Now, I would agree if you are a household that is earning significantly over the median income, then yes, you have the power to quickly build a pile of money that is big enough to change your life. “Financial freedom within 10 years is for the rich” isn’t quite as catchy. A positive aspect of the FIRE movement is that it is showing people an alternative way. You don’t have to save 85% of your income, but you should realize what you are giving up if you’re just spending it all.

My overall message? Personal finance still matters. You can make a difference. You can raise your income. You can prioritize your spending. I avoid the acronym FIRE acronym because the words are confusing for too many people. The vast majority are not going to “retire” completely from paid work in their 30s or 40s (even if they technically could). However, you can still read about the examples of others in order to find inspiration. Take what works for you, and leave the rest.

The fact is, if you are able to use your saved money in order to lead a life with less stress and more meaning, then you are winning the game as far as I am concerned. Different job/same place, same job/different place, less hours, more flexible hours, better hours, there are countless possibilities to improve your daily life.