5 ms·

Large salaries only lead to higher savings if they don't get gobbled up by taxes and a high CoL.

• godelski 9y ago
  You should be putting away a small percentage of your salary per month. Or else you are living above your means. So 5% of a high salary is larger than 5% of a lower. Or can be even higher than 10% of another area.
  • gozur88 9y ago
    I don't think it's reasonable to say you should be putting away a percentage of your gross. You have taxes and expenses, and your savings comes out of what's left. My point was that "what's left" part can be larger even with a smaller salary, depending on where you live.
    • sidlls 9y ago
      For jobs in this industry salaries everywhere are sufficient that a person should be saving the maximum percentage his company will match away in a 401k as a minimum (it's free money, more or less), if it's offered. Personally, I put 50% over the minimum in my 401k and then have after-tax allocations to savings and conservative stock (dividend paying) investments. If a 401k isn't offered, there are plenty of other ways to save some (smaller) post-tax amount. Here's the thing: for tech jobs in these low CoL areas the salary is also lower, so the 401k contribution is lower and one is more likely to have to contribute a smaller percentage because a greater percentage of the gross is spent on living expenses. The only cost of living item that is grossly out of whack with reason in the Bay Area is housing. It's not out of whack to the point that the entire boost in salary is consumed by housing expense.