So what is your savings rate? I’m talking about how much you save of your net (take home) pay, per pay. This would be on top of any pension deduction that may come off your pay. This would include things like RRSP (Registered Retirement Savings Plan) contributions, or TFSA (Tax Free Savings Account) contributions or any other savings. I would really like to see everyone put 20% or above for an honest answer, but that wont happen. I say 20% because I feel that should be the bare bones savings rate for everyone and anyone. What would be an ideal and consistently achievable savings rate then? 30-40% I say! Shoot for 40%, then if you can’t quite make it, you are still in a good place.
Lets turn this into real numbers. My current bi weekly net is around $1,300. At a 40% savings rate I should be stashing away $520 per pay, leaving me with $780 to spend on fixed expenses and as I please. 30% rate would save me $390. My savings rate is currently not close to either of those amounts, more on my rate in a bit. Why save so much? Because you can! It’s not difficult. You are much better off to be a saver than a consumer who goes on blindly spending your hard-earned money on crap to fill your house that you don’t need.
So how much am I saving then? I’m currently putting aside an amazing 12%! Yes 12%. Here’s why: debt repayment. All these debts come from The Dark Times (post to come). I’m currently making debt repayments of approximately $600 a month, or 23% of my monthly net! Great news though, in a few months, the larger, much larger, of these debts will be slayed. This should give me SOME increased financial flexibility, details to follow.
So if I take all my debt repayment of 23% and add it to my existing savings rate of 12%, I get 35%, that is a good place to be. However, currently I sit at 12%, waiting for that day when the big debt drops off the face of the earth, never to be seen again.