There was an article on Yahoo! finance last week entitled, Saving 10% of income might not suffice for contingencies. The article attempts to debunk the well known rule of thumb that says you should save 10% of everything you make in order to retire rich.

It talks about how 10% may not be enough in order to retire comfortably because it doesn’t take a lot of uncertainties into consideration. Well, this is certainly a breakthrough if I may say so sarcastically.

I don’t really know of anyone that follows this rule of thumb exactly. Between some savings in a 401(k) and other savings in other accounts, the actual percentage will almost always vary.

Far more important to get across are the principles behind this 10% rule. I see absolutely no reason to argue about what the perfect percentage of income to save would be. Obviously every person’s circumstances are different.

So what does this 10% rule teach us?

One of the principles is to pay yourself first. Take out a percentage of your income and set it aside for you, be it in an emergency fund or as part of your investments.

The other principle here is that it doesn’t matter how much you make. Contrary to what others say, it also doesn’t matter how much you spend. What matters is how much you keep.

If you make a lot of money and spend a lot of money, you’re not really making progress. If you spend only a little money but also only make relatively little, you’re not going to make much progress.

You could argue all day whether 10% or 17% is just the right amount, but there are far too many variables to consider (salary increases/decreases, changes in tax policy, inflation, etc.) that render the conversation useless.

Focus on what’s important and this focus should be on how much money you’re willing and able to keep.

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