Savings rates – Sweden vs. USA

I will be somewhat focusing on Stockholm, Sweden since this is where I am currently living. The average income for someone living in Stockholm is about 22000 SEK after taxes, which is about 2100 USD as of today (April 8 2019). Sweden does have a high cost of living, which deters people from eating out at the many available restaurants on a regular basis and this type of outing tends to be saved for more ‘special’ occasions or a treat.

Americans, on the other hand, tend to frequent restaurants and fast-food locations. This eats (pun intended) at your budget and it can have damaging effects on your health. Cooking is a skill that will always be useful, especially when you move to another place where your favorite foods are no longer available.

The Bureau of Economic Analysis published that Americans, as of February 2018, save about 7.5% of their disposable income. However, the more interesting number would be based off their net income. Which would be a lower percentage, maybe around 3%.

Swedes have a higher personal savings rate, despite high taxes and living costs. That means they must be doing something right. Their savings rate is around 10.51% of their income, as of Jan 2019, which is based off the household savings rate. This appears to be off net income as opposed to disposable income. This a huge difference when considering the cost of living average between both countries.

For instance, I make less than I did in the U.S. before I moved to Stockholm but I am saving a larger portion of my income. This is mainly because I do not need a car since I live close to a reliable metro system, so I do not have to pay for insurance or any other costs associated with owning a car in a large city. I also cook a lot at home since eating out is expensive, while in the U.S. it is so easy to order something quick, cheap, and somewhat yummy practically delivered to your doorstep. Meaning that you spend a lot of money on food as opposed to cooking. It is definitely a cultural difference of these two countries.

These averages are only an example of what the people in these countries are saving. In both countries, there are people who save 40-60% of their income. This is the average for the FIRE community. This is to reach the goal of financial independence retire early.

What do you think? How much of your income do you save?

Leave a Reply