Your Net WorthGlossary
Savings rate
Your savings rate is the percentage of your after-tax income that you save or invest rather than spend.
If you take home £3,000 a month and save £600, your savings rate is 20%. The higher the rate, the faster you can build an emergency fund, hit a savings goal, or reach financial independence.
Savings rate is one of the most powerful levers in personal finance. A higher rate both increases how much you invest and reduces how much you need to live on, which lowers the target portfolio for independence.
It is usually measured against net income, so taxes and pension contributions taken at source are already accounted for. Include employer pension contributions if you want a fuller picture.