Ancient Egypt, Food Supply and Savings Rates

Ancient Egypt, Food Supply and Savings Rates

Since I so recently wrote about Joseph in Egypt, it seems almost redundant to be referencing this wise and brilliant statistician so soon. Following my last article one reader in a PM made what I thought was a dynamite observation. So here is my shout-out to fellow Fire-Walker, Pearse Frazier, in Atlanta GA. Pearse made the observation that the genius behind Joseph’s plan during the seven years of plenty, was gutsy and aggressive Savings-Rate. Right on Pearse!

Now to be fair Joseph appears to have had some Divine Help on this one, but he knew that were would be seven years of profound prosperity followed by seven years of devastating drought and famine. He planned for the years of famine by building grain store houses and barns made healthy deposits into these food banks. With a carefully measured Safe-Withdrawal-Rate (SWR) Joseph was able to sustain Egypt and the surrounding countries during the time of crisis.

[I took this barn pic in South GA near Macon]

How did Joseph do it?  It is true that the SWR had a big part to play in this venture. Yet there is more to the story.  And it comes down to Savings-Rate (SR).

With 7 years of plenty, Joseph must have realized that he would need to save at least 50% of the crop each year to offset a year in which there would be no grain.   Year one, eat 50% of the harvest, invest 50% of the harvest for year eight; year one of the coming famine. In the second year of plenty, do likewise to provide for year 9 (year two of the famine). And so forth.  50% SR – Wow!

What I have observed about people in the Financial Independence (FI) Community is they generally have high Savings-Rates.  Well above the norm!  While it is true that many folk have incomes in the six-figure range, this is by no means the rule.  People earning well below $100K have impressive SRs, well above the 10 to 15% of Gross Income (GI) touted by many a “financial-planner”.  As most of you know PastorFi earns right at $70K, with six people dependant on that income.  For 2018 just as I did in 2017, my SR is set at 60% of GI.  I follow the sage and cliché-ic advice to pay myself first.  And this I do!

I have come to believe that FI is more about SR than increased income.  Cutting frivolous costs and increasing the money you save & invest will profoundly affect the rate at which you fill your proverbial silos.  Take a page from the Joseph play card and shoot for 50% SR.  It is not only possible, you can do it!