How Much Do You Save as a Percentage of Your Salary?

Posted By PK Last updated June 25th, 2012 20 Comments

Remember this post we wrote as a reaction to a prompt on our (at the time) current spending and saving? We wanted to revisit the topic with the whole of year 2011 in the books – and some solid numbers.

The PK Household Since 2009

For your voyeuristic pleasure, here’s how I did the last three years. Don’t be too impressed with 2011 – I bought a house and got married, which had a pretty significant effect on my taxes.

As for my definition of savings? I’m glad you asked, since Cameron and I had a discussion on this very topic some time back. My definition is technically incorrect, but from the average person’s perspective, arguably better – I’m not counting increases in equity or principal on loans (reduction in debt). I’m strictly tracking funds that go into investments, savings, or other easily-accessible accounts (read: liquid). So yeah; 23.146% savings in 2011!

Savings Versus Spending

You understand that all money that comes in will eventually be spent – money can be spent now in the present, in the future, or (through the miracle of inflation and fuzzy future monetary claims) by someone else. That means that there is some ideal savings rate… and it is not 100%. However, we at DQYDJ aren’t quite egotistical enough to tell you what it is (well, at least I’m not). Besides, there are multiple variables here – we’d have to factor in net worth and asset ownership.

Regardless, I do think that the number is well into the double digits, and I might even be a bit low where I’ve been the last few years. If you feel the need to tell me, feel free to leave a comment.

And For You?

So now that I’ve fulfilled my obligation as a DQYDJ writer and posted a graph, it’s time to turn it over to you – do you track your saving (or spending)? Is it positive? What’s your savings rate? Post it in the comments!

If you enjoyed this post, let others know!

Financialsamurai

I’m at 55-75% of my after tax income for the last 13 years after 401k. Yeah baby yeah! Now I gotta start spending more of it.
- http://www.dqydj.net/ PK
  
  As of this morning, you’re in the lead my man! My quick math on 75% is you could survive 39 years on it if you can just match inflation. Well done.
  - http://twitter.com/Yakezie Yakezie
    
    75% has only been for the past five years, but it’s been a fun ride.
    
    I’m really looking forward to spending. Some people hate spending their savings, but I think I’ll feel good.
    
    PS, donno why my account changed to Yakezie.
    - http://www.dqydj.net/ PK
      
      3 years per year x 5 years? You basically saved 15 years in that time – sounds like good ‘savings leverage’ or whatever we’re calling this concept, haha. You’ll have to fill in on your feelings (or misgivings!) when you go to spend…
http://twitter.com/BoomerandEcho Boomer and Echo

It looks like I’ll end up saving 25% of my income this year, but that doesn’t include $800/month in extra mortgage payments…so it’s more like 30%. We also had some major expenses this year, buying a car and doing the landscaping and fence for our new house. I expect next year we’ll be able to save 40%.
- http://www.dqydj.net/ PK
  
  Yeah, I think it’s unfair to include mortgage payments – since principal and equity are balanced it’s sort of crude to include the mortgage. However, at some level, it’s like an account where you constantly save more monthly – since interest is lowering, you actually put more principal in every month. Good work on the 25%!
http://www.fromshoppingtosaving.com/ From Shopping to Saving

Yup I track my saving and spending…yes it is positive! I actually have a pie graph showing the allocation of my paycheck
http://www.fromshoppingtosaving.com/2012/04/paycheck-distribution.html 16% goes towards investing (401k, roth, stocks) and I usually send about 25% of the disposable to savings. So about 41%!
- http://www.dqydj.net/ PK
  
  Are you maxing out the 401(k) and Roth?
  
  Those are some great numbers – I probably have to step it up in 2012 to catch my readers, heh.
Krantcents

I save about 35% of our income. It is easy since our children are grown and my only debt is a small mortgage.
- http://www.dqydj.net/ PK
  
  Well done – I’m realizing I’m on the short end of the savings scale with this little exercise.
  
  My debt happens to be a large mortgage, so I can’t quite compare!
http://MLISunderstanding.blogspot.com/ Remy @MLISunderstanding

My goal for 2012 is to save/donate 50% of my take-home income; I’ve exceeded this every month so far. However, the “saving” includes putting money toward large expenses this year and next year (my wedding and my graduate degree) so that I won’t take on debt. Therefore, my retirement savings aren’t very high this year. Once those two major goals are achieved, I can expect to save 25-30% of my salary in various investment vehicles and savings accounts.
- http://www.dqydj.net/ PK
  
  I hear you – it’s tough to know for sure how to count large purchases, especially if it comes out of savings – but it’s probably fair to just count the rate (assuming you’ll continue at a similar pace after your wedding). Well done on the numbers.
freeby50

We manage to save about 35% of our after tax income in 2011.

I think its good to look at your cash savings separately from your net worth. If you add in equity increases then this may give you an overly rosy picture when times are good. Somoene might have had awesome equity growth in 2005 and actually be living paycheck to paycheck if not counting their home value and stock investment growth.
- http://www.dqydj.net/ PK
  
  Yeah, my net worth is a separate category and I try not to conflate the two. Plus, net worth is sort of a goofy number which depends on the whims of the stock and real estate market, so I guess it’s only accurate within around 10-20% anyway.
  
  Good work on the 35% number. I’m realizing my savings are probably too low for this crowd – or I’m relying too much on price appreciation. Take your pick!
greg

I am reasonably content with investing 70% of after-tax income.

a good post on the same topic that has info to help people find where they fall:

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
- http://www.dqydj.net/ PK
  
  Nice share, Greg – I was going to do a similar article which ignored price appreciation of assets.
  
  On that note, even though I’m not part of the ERE crowd, FI is a pretty solid state. Looks like I’ll have to step up my game! Good work on the 70%.
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http://www.niterainbow.com/ Financial Independence

At the moment it is about 25% at our after tax income. We do not have company pensions, so it is only us. At this sort of rate we will lucky to retire at 60+ ; -)

The main reason is that we renting, we do not have mortgage, as it is more expensive.

How Much Do You Save as a Percentage of Your Salary?

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