JagInsights › Glossary › Savings rate
What is a savings rate?
A savings rate is the share of take-home pay you keep. How to count debt payments that are extra, and how not to count a transfer you will spend.
A savings rate is the percentage of take-home pay you did not spend. Money moved to savings, and extra payments that reduce what you owe, both count. A transfer you move back and spend does not.
Worked example
Take-home is $3,200. You move $400 to savings and pay $200 extra on a card, above the minimum. You kept $600. The savings rate is $600 divided by $3,200, which is about 19 percent. The minimum card payment does not count. It is a bill, not savings.
Why it matters
The rate is the cleanest single number for whether the month moved you forward.
Questions people ask
Does an employer retirement match count?
The match is compensation, not part of your take-home. Track your own contribution against take-home so the rate stays comparable month to month.
What is a good rate?
20 percent of take-home is a common target from the 50/30/20 draft. A lower rate that you actually keep beats a higher one you abandon.
Do I count a tax refund?
You can, in the month it arrives, as long as you do not also pretend it arrives every month.
Educational information only. JagInsights is not a financial adviser, broker, or lender. See the Terms and Privacy Policy.