so here is something that I have seen time and time again, not necessarily on this forum but on reddit and on other FI related forums and blogs: The savings rates are unrealistic and probably don’t take into account the living expenses, painting a distorted picture about savings and doing a disservice to those who are just starting out on their fire journey.
I so often see “80% savings rate” “60% savings rate” being thrown around. But how real are those numbers?
I made a calculation and you might be surprised how many expenses are unavoidable.
Here is an example.
We are talking about a taxable income of 100000chf p.A for simplicity (that translates roughly to 140k-150k gross income)
If you live anywhere in a populated area in Switzerland where you could realistically achieve 100000chf without dumb luck or special skills, you will have to pay a lot in rent.
I would say the medium rent (conservative estimate) for a small family (3.5 rooms) is 2500chf.
there goes your 80% savings rate … unless you live in a WG forever. But we are far from done yet.
Taxes for a family of two on that income (no kids) 12716chf
If you and your partner do not have a car and are commuting locally, I would add at least 1400chf for public transportation. If you are unlucky and one of you has to commute out of town, add about 3000chf for a GA.
Right now we are looking at 44116chf best case, bringing down the savings rate below 60%.
We forgot something important and that is health insurance. Lets say best case you never get ill and choose the cheapest health insurance every single year.
2 people Assura with 2500 franchise is 6300chf p.A. (might be cheaper in some places, more expensive in others)
Right now we have reached 50416chf, bringing the savings rate < 50%.
You have not eaten so far, which would probably be a good idea. Lets calculate with a 500chf monthly food budget (very ambitious), 6000chf p.A
56416chf. So far we have calculated just very basic living expenses and the 40% savings rate is already in danger.
Let me know what you think. For further calculation I will add my own personal expenses to the calculation. When looking at the big expense block above these are actually not that relevant anymore.
Internet: 780chf p.A.
Smartphone: 420chf p.A + 150chf p.A for a medium class smartphone every 3 years
Electricity: 400chf p.A (also every dependent on your living situation)
Garbage disposal: 300chf p.A
If you have a dog:
Dog food: 700chf p.A
Fitness: 1000chf p.A