Savings Rate Calculator
Calculate the percentage of your income you’re saving and project how your savings will grow over time.
Quick Use Samples
Your Savings Details
Your Savings Projection
Projection assumes a 7% average annual investment return.
Income vs. Savings
Savings Rate Benchmarks
Your savings rate of **20.0%** compares as follows:
- **Below 10%:** Low - consider reviewing your budget.
- **10-20%:** Average - a good start.
- **20-35%:** High - on track for early retirement.
- **Above 35%:** Excellent - Financial independence is in your sights!
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What is a Savings Rate?
Your savings rate is the percentage of your after-tax income that you save and invest. It is one of the most important metrics for measuring your financial progress. A higher savings rate means you are reaching your financial goals, like a house deposit or retirement, much faster.
Behind the Formula
The calculator uses a simple formula: (Total Savings / After-Tax Income) * 100 = Savings Rate %. It then projects the future value of your savings by using a compound interest formula, showing how your consistent savings can grow into a significant sum over time when invested.
Expert Insights
- Your savings rate is more important than your income. A person on a modest income with a high savings rate will build wealth much faster than a high-income earner who saves very little.
- The 50% savings rate is a key milestone in the Financial Independence, Retire Early (FIRE) movement. At this rate, for every year you work, you are saving enough to cover one year of living expenses, dramatically accelerating your path to retirement.
- Don't forget to include your superannuation contributions in your savings rate calculation. Your compulsory employer contributions are a form of 'forced' savings that significantly boost your overall rate.
Actionable Tips
- Automate your savings. This is the single most effective way to increase your savings rate. Set up an automatic transfer to your savings or investment account for the day you get paid.
- When you get a pay rise, commit to saving the entire raise. This is a painless way to dramatically boost your savings rate without changing your current lifestyle.
- Track your savings rate every month. Turn it into a game to see if you can increase it by even one or two percentage points. Small, consistent improvements lead to huge results over time.
Real-World Examples
Saving for a house deposit
A couple trying to save for a house deposit use the calculator to see that their current 15% savings rate won't get them to their goal for 7 years. They make a plan to cut expenses and increase it to 25%, cutting their timeline down to just over 4 years.
A recent graduate starting their career
A graduate starts their first job and commits to a 20% savings rate from day one. The calculator shows them that by starting early, even with a modest starting salary, their investments could be worth over $500,000 by the time they are 40.
The impact of a small increase
Someone decides to increase their savings rate from 10% to 15%. While it doesn't feel like a huge change month-to-month, the calculator shows them this small step could result in an extra $150,000 in their retirement nest egg over their career.
Glossary of Terms
Savings Rate
The percentage of your after-tax income that you save and invest.
Compound Interest
The process of earning returns on not just your original investment, but also on the accumulated returns of previous periods. It's how your savings grow exponentially over time.
FIRE (Financial Independence, Retire Early)
A lifestyle movement focused on achieving financial independence and retiring early, primarily through a high savings rate.