There are plenty of positives that have come out of the coronavirus pandemic: better health, less pollution, more time with family, an acceleration in the work from home trend, and the chance to buy stocks at large discounts, to name a few.
However, perhaps one of the biggest positives from losing our freedom is the surge in the U.S. personal saving rate to an incredible 33%!
The personal saving rate is defined as savings as a share of personal disposable income. Personal disposable income is defined as income less taxes.
If your income stays the same, the higher your personal saving rate, the stronger your household balance sheet. The stronger your household balance sheet, the more financially secure you will feel. The more you save, the quicker you will achieve financial independence. Love it!
Our household plan has been to cut our spending by 32% to match the 32% decline in the stock market from peak to trough. If the stock market and our income rebounds, we will have increased our cash flow and our wealth. If the stock market and our income stay depressed, then we will have continued to protect our financial freedom.
As evidenced by the latest personal saving rate data, I’m pleased to see tens of millions of Americans do the same.