Enter the total monthly savings and monthly gross income into the calculator to determine your savings rate.

## Savings Rate Formula

The following formula is used to calculate a savings rate:

``SR = MS/MI *100``
• Where SR is the savings rate (%)
• MS is the montly savings (\$)
• MI is the monthly gross income (\$)

## Savings Rate Definition

A savings rate is defined as the ratio or percentage of monthly gross income that an income or household is able to save each month after all expenses are paid for.

For example, if an individual earns \$5,000 per month and they are able to save \$2500 per month, then the savings rate is 50% because they are saving half of their income.

## What is a good savings rate?

In general, a savings rate of anything above 15% is considered extremely good. The higher a person’s income, the higher their savings rate should be.

## Example Problem

How to calculate a savings rate?

1. First, determine the total monthly gross income.

For this example, we are looking at a household with monthly incomes of \$4000 and \$6000 from the heads of the household respectively. This leads to a total income of \$10,000.00.

2. Next, determine the total monthly savings amount.

In this case, the household is only able to save \$1000.00.

3. Finally, calculate the savings rate.

Using the formula above, the savings rate is calculated as:
SR = MS/MI *100
SR = 1000/10000 *100
SR = 10%.