The 10% solution takes the math out of saving. To figure out how to save, simply take your gross pay each period and “drop” the last digit. If monthly gross income is $2,000 per month, save $200. If family gross income is $60,000 each year, save $6,000 per year, or $500 each month. The 10% solution strategy has been described in many personal finance books, including The Wealthy Barber by David Chilton. The Association for Financial Counseling and Planning Education® is promoting the 10% solution to increase the savings rate of Americans.
Is 10% of your gross income enough to save for a financially secure future? Maybe yes and maybe no. The answer to this question depends a lot on your current age and the cost of future financial goals. Regardless, 10% is a great start and provides a target for saving for emergencies, major purchases, and financial security in later life.
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