Wtf is going on with my savings rate?


I have been giving the 1% Challenge a go for the last eight months. For those who don’t know, it is a challenge to bump up your savings rate 1% each month – the idea being that if you increase your savings ever so slowly, you won’t miss that extra $20 or $40 or $70 getting funnelled into your savings each month.

Eight months in, and I’ve learned some lessons about trying to bump up your savings rate:

  1. Having side hustle or freelance income makes it pretty difficult to make projections about your savings rate with any kind of accuracy.
  2. My savings rate varies pretty wildly from month to month (see #1) – but I am becoming more okay with that.
  3. Tracking my savings rate – along with all of my spending and my net worth – has been hella helpful for getting my financial life together.

Why is tracking your savings rate so awesome?

It tells you, more or less, in how many years you will be able to retire. It is an easy-to-monitor number that tells you much more about your financial health than your income does.

You might earn 200K a year, but if your savings rate is 5%….YOU GON BE WORKING FOR A LONG TIME.

If you want to learn more about how to actually calculate your savings rate, check out my earlier post that walks you through exactly how to figure out this percentage.

Most run-of-the-mill recommendations advocate for putting somewhere between 10-15% of your income towards retirement. But in the online personal finance community, it is not uncommon to see savings rates well above 50%.

I tend to hover somewhere in between. Over the last eight months, my savings rate has fluctuated anywhere from 16-55% and it tends to land around 25-30% of my income.

I would never argue that this is possible for everybody.  I have a boatload of privilege that allows me to save that proportion of my income. But I do think that it’s possible for many of us – because there is nothing particularly extraordinary about my situation.

I am not a high earner. I still have student loans. I am not excessive in my lifestyle, but there are definitely some areas I could pare down. I love going out for the odd cocktail, buying a latte every Friday, and I recently broke down and bought a car (used, obvi, but still).

You can do some of those things, and still save a good percentage of your income.

So let’s take a look at how I have done with my savings rate over the last eight months.

Here is a recap of how I did during my first four months of the challenge.

  Goal (%) Actual (%)
March 30 29
April 31 33
May 32 31
June 33 41


And what happened in the last four months?

  Goal (%) Actual (%)
July 34 21
August 35 55
September 36 16
October 37 25

All I can say is….wtf is going on with my savings rate?


I fell short of my goal for three out of the last four months. In July, I took a vacation and absorbed most of the cost from my usual monthly expenses rather than dipping into my vacation savings account –my savings goals took a hit as a result.

August was nuts with a 55% savings rate. I received a windfall, and was able to redirect over half of my income to various savings and debt repayment goals including my emergency fund, my investment account, and my student loans.

September was a 3-paycheque month so I should have done really well here. What happened? Well…I bought a car instead. This was a purchase I had been contemplating for about a year and I wanted to only move forward when I knew that owning a car actually made sense for my budget.

My 16% September savings rate might look pretty abysmal on paper -but I bought a car in cash AND was able to pay down debt and save for my future all in the same month. That is a huge victory when looking back on where I was with my finances this time last year.

October was also hit pretty badly in terms of my savings goal. I was traveling internationally for the first 10 days of the month and like my trip in July, I wanted to absorb most of the travel costs from my regular budget rather than dip into my savings.

So what’s next?

According to the 1% Challenge, my savings rate goal for the month of November would be 38% and December would be 39%.

That is a huge stretch goal for me. I have only been able to achieve savings rates higher than that on months with unusually high income. But I am still going to pursue it and I will keep you posted on how November and December – what can be some pretty spendy months – end up looking.

The 1% challenge has been an excellent way to look for the small wins. To find the little ways of earning an extra $40 or saving an extra $20/month. These are the little things that you can start doing today that can snowball and make a big difference in the months and years to come.

The 1% challenge has also made me think long term, though. I can keep working on upping my savings rate each month, but I am going to keep hitting a wall — unless I make some big changes. 30-35% seems to be the ceiling on my savings rate, assuming that I maintain my current income and fixed expenses. So that’s my next move.

I am paying too much for rent right now and I should be able to find something in downtown Ottawa for $100-200/month less than what I am currently spending. I am also exploring some job moves that would come with a pretty significant bump in my annual income. I am beyond excited to see what some of these longer-term goals can do for my monthly savings rate.

How are you doing with your savings goals? Where do you typically land with your monthly savings rate and does it tend to fluctuate wildly each month? Let me know in the comments!

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