Your savings rate is the percentage of your personal income that you set aside to save. It’s a way to see how much of your income you keep. For example, say you save $1,000 in a month.
- If you brought home $5,000, saving $1,000 means your savings rate is 20%.
- If you brought home $10,000, that same $1,000 gives you a 10% savings rate.
Your personal savings rate matters because it gives you a way to track your savings habits and set goals, even if your income and expenses change.
How to calculate your savings rate
Here is the formula: (total savings / total income) x 100 = your savings rate
Using the example above:
($1,000 / $5,000) = 0.20
(0.20) x 100 = 20%
Nerdy Perspective
Where should I put my savings?
A high-yield savings account is my go-to for emergency savings because it’s easy to access. Right now, I wouldn’t bother with an account paying less than 3%. I also think certificates of deposit are underrated. If your emergency fund is covered, you can put extra savings in a CD and get a guaranteed rate that could be higher than the best HYSA rates. The catch is you’ll pay a penalty if you withdraw the money early.
» Ready to learn more? Take a few minutes to read NerdWallet’s primer on three types of savings accounts (regular savings, CDs and money market accounts)
What counts as income? Gross money or take-home pay?
Use take-home pay as your income number because it’s easier to track your cash flow. You simply look up how much you’re paid and you compare it against how much you deposited into savings. Those two numbers give you what you need to calculate your savings rate.
🤓Nerdy Tip
In addition to knowing your personal savings rate, you’ll also want to check your retirement savings rate a few times a year. When it comes to retirement savings, use gross income instead of take-home pay. That way, you can include your retirement contributions in your savings total and see how your rate compares with common retirement planning guidelines.What should your personal savings rate be?
Target 20% of your take-home pay for your personal savings rate. According to NerdWallet’s April 2026 savings report, 44% of employed Americans said they save at least 20% of their take-home pay. But about 22% said they aren't sure how much they regularly save. If that’s you, take a look at your last few bank statements and see how much you managed to save.
Then, look at how much cash you have left over each month after expenses and see if there is more, or a more consistent amount, that could go into savings. Then take that amount and use the formula above to calculate your personal rate.
It’s worth noting that the popular 50/30/20 budget suggests putting 20% of your take-home pay toward savings and debt repayment, 50% toward needs and 30% toward wants. When you follow this budget, you're already working toward the ideal savings target. (The full 20% goes to savings after any debts are repaid.)
If you can’t save 20% right now, you’re not alone. According to the U.S. Bureau of Economic Analysis, the national personal savings rate was 3.0% in July 2026. That figure isn't directly comparable to your personal rate because it measures savings as a broad share of after-tax income across the country, not individual households. But it can offer some perspective. If you start with a rate that's lower than your target, it's OK. Just save what you can and work yourself up to 20% over time.
If you can save more than 20%, look into investing the extra money. Stocks, bonds and other securities may offer higher returns than what your cash cushion can earn in a bank. But investments also come with more risk, so make sure you have your savings in place first.
Time-tested ways to increase your savings
Your savings rate and budget go hand in hand. So the first step to increasing your savings is to pick a budget (such as the 50/30/20) and track your money. Beyond that, here are some of my favorite tips:
- Make small rate bumps. Maybe your savings rate is 5% now. In another three months, could it be 6%? It's easier to succeed if you make small adjustments instead of trying to jump from 5% to 20%. Try doing manual transfers for the higher amount for a few pay cycles first. If your checking account can comfortably handle it, you’re ready for the next step.
- Automate your increased deposits. Schedule a transfer for each paycheck so the money moves into savings before you have a chance to touch it. I've found that setting it up once and letting it run is an easy way to make saving feel like less work.
- Bank extra cash. You've probably heard this before, but it's worth repeating: If you receive a surprise bonus or a gift, put it into savings. I like to think of it as free money that keeps working for you by earning interest.
A savings rate is not the same as your savings APY
There's a difference between a personal savings rate and the annual percentage yield, or APY, your savings account earns. Your savings rate measures how much of your income you save. Your APY is calculated from your account's interest rate and measures how quickly that savings grows.
Check out the calculator below. If you start with $1,000 and make monthly $1,000 deposits in a high-yield account earning 4% a year, you'd earn a little more than $2,265 in interest after three years (on top of $37,000 in deposits). But enter a 0.50% rate, and the interest earned drops to less than $279.
The more you save, the more cash you have working for you. Pair a savings rate that fits your budget with a competitive APY, and you have a winning combination.
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