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Frugalometer 2018: Compare Your Spending and Saving to Others Who Earn the Same Income

What’s a reliable measure of frugality?

It’s certainly not savings alone. If you said you saved $100,000 last year, at first blush that might seem thrifty. But if you also told me you made $2.5 million last year, I wouldn’t exactly call you frugal (but I would be very impressed by your earnings).

As better gauge of frugality, we might figure your “savings rate,” a measure by which total savings are divided by total income.

For example, let’s say Jane Dough earned $150,000 last year with household expenses of $87,500 and taxes of $25,000. She thus had $37,500 left over for a savings rate of 25 percent ($37,500/$150,000 = 25%). Is Jane fantastically frugal? Maybe. Her 25 percent rate sounds impressive, but we need data about similar wage earners before we bestow any superlatives.

That’s where nationwide surveys come in.

The Bureau of Labor Statistics conducts an annual Consumer Expenditure Survey (CEX), which asks citizens about their income, taxes, household expenses, and savings. The CEX is a huge operation. Typically, about 7,500 households are interviewed.

Using CEX data, you can compare your own household to others that earn similar incomes. To assist you, I’ve prepared a new interactive calculator, which I’ve dubbed the “Frugalometer.” Like every other calculator on this website, the Frugalometer is completely confidential and nothing you enter is recorded or stored.

The Frugalometer is designed to provide a better measure of frugality than mere saving figures or saving rates. Hopefully, it will inspire its users to spend less and save more—you, perhaps?

Frugalometer Instructions

The calculator is easy to use. You enter three numbers only. In return, you get detailed feedback about how you stack up against other US households. If you want, you can even print out a copy of your results.

Line 1: Annual Pre-Tax Income. Estimate your gross income before taxes. If you want precision, this figure appears on Form 1040EZ (line 4) or Form 1040 (total all gains reported above line 22 and ignore any losses). Note: the Frugalometer doesn’t work for gross incomes below $16,229 or above $300,000.

Line 2: Annual Expenses (Excluding Social Security and Pension Payments). Estimate your yearly expenditures. Don’t include any amounts you’ve paid into social security or private pension funds. If you’ve never calculated your annual expenses before, here’s a quick way to reach a reliable figure.

Line 3: Annual Federal and State Taxes. Your total federal tax appears on Form 1040EZ at line 10 or Form 1040 at line 63. Retrieve your total state tax from the analogous line of your state form.

Now you’re ready for the Frugalometer. Once you make your entries, lines 4 through 13 will display a ton of helpful information. A detailed guide to each line appears below.

Frugalometer 2018

1. Enter Annual Pre-Tax Income: $
2. Enter Annual Expenses (excluding soc. sec. & pension payments): $
3. Enter Annual State and Federal Taxes (from tax returns): $


Your Frugalometer Results
1. Your Pre-Tax Income:
2. Your Annual Expenses:
3. Your Annual State and Federal Taxes:
4. US Average Expenses for Your Pre-Tax Income (see line 1):
5. US Average State & Federal Taxes for Your Income (compare to line 3):
6. US Average Savings for Your Income (line 1 - line 4 - line 5):
7. US Average Savings Rate for Your Income (line 6 / line 1):
8. Your Personal Savings (line 1 - line 2 - line 3):
9. Your Personal Savings Rate (line 8 / line 1):
10. You Saved x Dollars +/- US Average Savings (line 8 - line 6):
11. You Saved x Percent +/- US Average Savings Rate (line 10 / line 6):
12. Your Frugalometer Score (100 is Average):
13. Your Frugalometer Grade (C is Average):
source: www.frugalfringe.com
© 2018 A. Noonan Moose


Key to Frugalometer Results 

Line 4: US  Average Expenses for Your Income. Using 2016 CEX data, this shows US average expenses for your income level. As to incomes below $269,644, the averages were derived through linear interpolation. As to incomes above $269,644 and up to $300,000, the averages were obtained through linear extrapolation. To see the underlying CEX data, click here.

Line 5: US Average Federal and State Taxes for Your Income. This line is similar to line 4, except it reports average taxes rather than average expenses.

Line 6: US Average Savings for Your Income. In this simple calculation, the figures for lines 4 (expenses) and 5 (taxes) are subtracted from line 1 (income) to report the national average savings at your income level.

Line 7: US Average Savings Rate for Your Income. This divides line 6 (average savings) by line 1 (income) to report the average rate of savings for those at your income level.

Line 8: Your Personal Savings. This reports the difference between your pre-tax income as entered in line 1 and your expenses and taxes as entered in lines 2 and 3.

Line 9: Your Personal Savings Rate. This restates your personal savings as a percentage of your reported income in line 1. If this percentage is higher than line 7, you're outperforming the national average for your income level.

Line 10: Your Savings Compared to the US Average as Stated in Dollars. This states a dollar amount for the difference between your annual savings and the average savings for households at your income level. If line 10 is a positive amount, you've bested the national average.

Line 11: Your Savings Stated as a Percentage of the US Average Savings Amount. This restates the dollar amount on line 10 as a percentage. For example, if the reported figure reads 10.57% this means that you've saved 10.57% more than the average household at your income level. If the reported figure is a negative percentage, you're saving less than the average household at your income level.

Line 12: Your Frugalometer Score. Regardless of whether line 11 states a positive or negative value, this line rounds it off and adds 100 points. The higher your score the more frugal you are as compared to other savers. An average score is 100.

One benefit of this scoring system is that it's weighted to allow direct comparisons among those who earn different incomes, much like a handicap scoring system for golfers. For example, someone who earns $40,000 and saves $10,000 will receive a higher score than someone who earns $200,000 and saves $30,000. This approach recognizes a basic reality: those who save on lower incomes often practice greater frugality than higher wage earners—even though higher earners save more in terms of sheer dollars.

Line 13: Your Frugalometer Grade. This provides a letter grade to accompany the numerical score on line 13. Grades appear in increments of C, C+, B-, B, B+, A-, etc. Generally, you move up one grade for each five points added to your line 12 score.

*   *   *

The Frugalometer is designed to help you nudge yourself just a little further into the habit of frugality. This site hosts other interactive tools tailored for the same purpose. Visit these links:

Photo by taxcredits.net

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3 Responses to Frugalometer 2018: Compare Your Spending and Saving to Others Who Earn the Same Income

  1. Ten Factorial Rocks January 31, 2018 at 6:11 AM #

    Interesting post, and love the elegant calculator. I entered my data and it gave me a A+++ rating. Our PAW ratio as per the calculator on my website is over 3 (that post is here if you’re curious: http://tenfactorialrocks.com/paw/). They are both correlated because a consistently high rating on your scale is what allows one to become a PAW!
    Ten Factorial Rocks recently posted…Net Worth Angst? Beware of This BiasMy Profile

    • A Noonan Moose January 31, 2018 at 9:32 AM #

      I remember PAW (Prodigious Accumulator of Wealth) from The Millionaire Next Door, which is one of my top three favorite personal finance books. I checked out your PAW calculator and thought it was great!

Trackbacks/Pingbacks

  1. Expense Reports, Pay-Off Updates and Changing My Mind, Again | Kate Nesi - February 8, 2018

    […] to question again if we really were. Thank goodness Frugal Fringe came to the rescue with the Frugalometer calculator to give me a grade. I like being an A+++ […]

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DISCLAIMER. All information on this website appears on an "AS IS" basis. A Noonan Moose makes no representations to any reader as to the completeness, accuracy, or suitability of the information that appears on this website. A Noonan Moose specifically disclaims liability of any kind for any damage or loss that arises from any of the information published on this website or in the book Spend Less Now!