If it feels harder to save these days, you’re not alone: Rising costs are squeezing a lot of budgets. One simple way to take back a little control is to understand your savings rate. It’s a quick snapshot of where your money is going and how you might be able to save more.
What is your savings rate?
Your savings rate is the percentage of your income you save. It can be a simple indicator of long-term financial health—almost like a speedometer showing how fast you may be moving toward your goals. As a starting point, Fidelity’s guideline suggests aiming to save at least 15% of your pre-tax income for retirement. From there, you can layer in additional savings for near-term needs, like emergencies or big purchases, which can help build financial resilience, reduce money stress, and keep you moving toward multiple goals at once.
For instance, Fidelity's budgeting guideline also suggests saving 10% of after-tax income for short-term savings and emergencies. Your total savings rate can include all the goals you're saving for, and you can break it down further to look at each goal individually or to evaluate pre-tax and after-tax savings separately.
How to calculate your savings rate
To calculate your personal savings rate, gather your personal income and savings information, and decide which income figure to use: Gross income (pay before taxes and deductions), take‑home pay (what’s deposited into your bank account), or calculate both to compare.
- Add up all savings contributions, including pre-tax retirement contributions, such as 401(k) or 403(b).
- Include any employer matching contributions.
- Compare total savings to total gross income for a big‑picture view.
If using take-home pay:
- Start with the money you actually receive each month.
- As with the previous calculation, add up all savings contributions, including any pre-tax retirement contributions and employer match.
- Compare total savings to take‑home pay to see how much you save from money you directly control.
Use the results to understand your saving habits from different perspectives.
Savings rate calculation example
Here’s a hypothetical example to make calculating your own personal savings rate a breeze:
A single filer who earns $150,000 a year would fall into the 24% marginal tax bracket:
Calculate the dollar amounts you’re saving. Let’s use annual here.
- 15% of $150,000 to your 401(k) = $22,500
- $7,500 from take-home pay to short-term savings
- $4,500 to a 529 plan
Total annual savings = $34,500
Gross income savings rate: $34,500 ÷ $150,000 = 23%
For illustrative purposes only
If you prefer looking at it in terms of take-home pay instead, that works too—just remember to include any pre-tax retirement contributions (and any employer match) in the calculation of your total savings. The important part is capturing all the money you’re saving, no matter how you run the numbers. Tracking the same metric consistently can help you see your progress and compare savings rates across years.
Tips to boost your personal savings rate
1. Track your starting point
Before you can make progress, it helps to know where you’re starting from. Getting a clear picture of your take-home pay and how much you’re already saving can make the whole process feel less overwhelming. Once you see the numbers in front of you, it’s much easier to spot small changes that could make a big difference over time.
Steps to consider:
- Use Fidelity's free digital tools, a budgeting app, or a spreadsheet to track your spending and savings.
- Set short-term and long-term goals that are simple, specific, and doable. Even small, well-defined targets can make it easier to measure progress and keep going.
If you want help figuring out where your money is going, Fidelity’s easy budgeting guideline offers an easy place to start.
2. Review your tax withholding and look for credits that boost your cash flow
A quick look at your tax filing and withholding can help you keep more of your own money throughout the year. Many people end up over-withholding on their W-4 without realizing it, which is why big refunds are so common. Adjusting your withholding so it better matches your actual tax situation can help free up extra cash in each paycheck.
It’s also worth making sure you’re taking advantage of any tax breaks you’re eligible for. Credits and deductions can reduce the amount of tax you owe, and contributing to eligible pre-tax accounts—like health savings accounts (HSAs), IRAs, or workplace plans such as 401(k)s or 403(b)s—can help reduce your taxable income while potentially boosting your long-term savings.
Steps to consider:
- Review your W-4 early each year to make sure your withholding reflects your tax situation.
- When you file your taxes, pay attention to credits or deductions you qualify for—such as education credits, childcare credits, or retirement savings incentives. Claiming these may reduce your tax bill or increase your refund, giving you more room in your budget.
3. Trim small expenses and redirect the difference
Small habits—things you barely notice—can compound over time, eating into your budget bit by bit. Redirecting just a few dollars a day into savings can make a difference without requiring a major lifestyle change.
Starting small also makes saving feel more doable. A challenge like Fidelity’s 52-week money challenge can help you build consistency and keep the process manageable without a lot of effort. These micro-savings can deliver quick wins and help you build stronger long-term habits.
Read Fidelity Viewpoints: 10 money challenges to help jumpstart savings
Steps to consider:
- Identify one small daily habit you don’t mind trimming and send that amount directly to savings instead.
- Try a structured challenge like a weekly savings plan to build momentum.
4. Automate your savings
Making your savings automatic is like setting up your own financial assembly line. Once it’s in place, the amount you want to save moves straight into the account you’ve chosen, so it’s one less thing you need to think about. Many workplace savings plans offer an auto-increase feature letting you nudge your retirement savings up each year effortlessly. Small moves, even by 1%, can add up and have a meaningful impact on your future.
Steps to consider:
- Raise your payroll withholding or direct deposit by a small percentage when you receive a raise.
- Set up automatic transfers to savings, retirement, or brokerage accounts right after payday. At Fidelity, you can even set up recurring investments, so some of your investments will happen automatically.
Beyond your personal savings rate: How to help grow your savings
Saving more money is half the battle—investing for growth potential can be the key to reaching your long-term goals. Cash kept in low-interest accounts rarely grows fast enough to keep up with inflation, which means its buying power can shrink over time.
That’s why Fidelity believes investing is essential to long-term financial success. Historically, stocks have outperformed cash over long periods of time. A diversified portfolio could make more sense than holding too much in cash. Before making any investment decisions, it's important to consider your financial goals, personal situation, time horizon, and tolerance for risk.
Read Fidelity Viewpoints: How to start investing
Steps to consider:
- Make sure your financial basics are in place. A solid budget, essential insurance, and emergency savings give you the stability you need to invest confidently.
- Contribute to tax-advantaged accounts first. Put money toward long-term vehicles like an HSA, 401(k), 403(b), or IRA—especially if your employer offers a match.
Read Fidelity Viewpoints: A step-by-step financial checklist
The bottom line on your personal savings rate
Check your personal savings rate regularly to monitor your progress and look for ways to increase your contributions. Celebrate milestones along the way to reinforce positive behavior. Revisit your goals annually as your career, family needs, or financial priorities change, so your plan grows with you.