How Long Does It Take To Save A 30-Day Buffer?
I was curious about how long it would take to save a 30-day buffer based on the percentage of income saved. Like, "How much better is it to save 10% vs. 5%" Turns out...
Obviously, YNAB can calculate how long it'll take to reach a goal but I did it in a spreadsheet and discovered something super cool...
Saving falls on a power law curve ...which means... if you're only saving 1-5% of your income, it'll take a LONG time to save 30-days worth of buffer. At 1%, it's 100 months. 2% isn't much better at 50 months.
But at 6%, it speeds up drastically and the sweet spot ends up being in the 10-15% range that most financial experts recommend.
Check it out here and feel free to copy the sheet to your drive so you can plug in your own income!
Chris Jacobie Very cool and thanks for posting. The number you added for (what are presumably your) total monthly expenses at the top is pretty close to what mine are, so this is very helpful!
I am fortunate to have just gotten a pay raise which, if applied monthly to re-building my emergency fund, would build up to 30 days of expenses in just about 12 months - in the 8% range on your chart. Not super fast, but it's something. On one hand I would feel great doing that, but on the other hand I am so tempted to take the extra money and throw it at debt. Decisions, decisions.