As financial literacy month draws to an end I hope you’ve learned some new things about your money, heck even a I picked up a few new tips. I noticed throughout the month that many articles focused on investing, but if we just focused on increasing our savings rate instead, we would be much further along with our net worth.

Your savings rate is the amount you put aside from your disposable towards savings. It should be no surprise that with rising debt levels, Canadians overall savings rate has dropped over the years.

It can be easy to increase your savings rate as long as you’re willing to make sacrifices. Here’s a general breakdown of my budget and savings rate.

My Monthly Expenses

  • Rent
  • House maintenance/supplies
  • Home insurance
  • Entertainment
  • Internet / home phone
  • Cell phone
  • Transit pass
  • Car insurance
  • Gas
  • Monthly parking
  • Gym
  • Groceries

savings rate

I split most of my expenses with my wife. Being in a dual income situation makes expenses a bit easier to manage. To keep our savings rate high we cut our cable years ago; a bit ironic since I work in television. We also try to keep other costs at a minimum, our internet / home phone is through TekSavvy which offers much cheaper rates compared to the big players in Canada.

My expenses remain relatively low since I’ve cut out unnecessary spending. Overall my expenses take up about 40% of my net income.

 Related: Achieving a 100% savings rate

My monthly savings

  • Employee Share accumulation plan
  • Defined benefit pension plan
  • Long term savings
  • Car maintenance
  • Personal spending
  • Presents
  • Vacation savings

IMG_7262

I’ve set up all of my savings to be automatic. What that means is, every paycheque or once a month (depending on the item), the desired amount is automatically taken directly from my paycheque or account. In other words, I’m paying myself first.

These savings equate to 59% of my net income, since the remaining 1% is not formally in my budget so I consider it float/spending money. Yes I budget everything.

 Related: Track your spending now!

Some would argue that vacation, car maintenance, personal spending, and presents shouldn’t be considered “savings” since the plan is to eventually spend that money. I see their point but I look at this way; I’m saving in advance so when those eventual expenses do come up I won’t need to charge it on credit, I’ll always have the funds available.

That being said if I just calculated my employee share plan, pension, and long term savings for my savings rate I would still be at 46%

Final word

It took me a while to get to where I’m at now and I’m pretty happy with my savings rate. I know moving forward saving nearly 60% of my salary may be impossible so that’s why I’m trying to bank as much as possible now.

If you’re able to trim your expenses here and there, you’ll quickly see your savings rate increase too.

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Image courtesy: Matt MacGillivray via StockPholio.com