The most important rate in personal finance isn’t the one that’s talked about most often.
You hear far more about interest rates, inflation rates, mortgage rates, treasury rates, insurance rates, growth rates and rates of return.
And to some extent, all those rates matter, at least to the broader economy.
But for you, in particular, the single most important rate is the only one that’s in your direct, immediate control—your savings rate.
To an underestimated extent, your financial future depends on the rate at which you save money every month. By how much does your income exceed your expenses, and how much of that surplus do you manage to squirrel away into savings and investment accounts?
That’s the long and short of it. The TLDR. The whole enchilada, the whole nine yards, and the whole ball game. It is the thing. Supreme.
If I was only able to use one number and one number alone to predict how well someone’s financial future was going to go, the rate at which they save would be the number.
If you’re in your wealth building years, most of your focus belongs on increasing your savings rate. Almost all the other good stuff is downstream of that.