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Don't let your savings rate undermine your goals and your future

Writer's picture: David DaleyDavid Daley

Why your savings rate matters

Tile showing savings rate (Sr)

If your savings rate is zero then it doesn't matter where you are keeping your savings. There are lots of ways to save money, savings accounts, high-yield accounts, under the mattress, or in brokerage or retirement accounts. When we ignore our savings rates we have a lack of clarity around our financial health. When actually saving money is always tomorrows problem, tomorrow has a way of turning into next month, next year, or never. Yet most of us have goals that we want to save towards, and it isn't always retirement.


Why you should care about your savings rate

Why do we accept that we have just enough money to pay for the payments? Saving is an important part of planning for our goals. You might know that you are going to need a car that fits more car seats in the next few years. Maybe your next big goal is buying a home or starting a business. Or maybe you really wish you had an emergency fund, so you can finally light the credit cards on fire. In Q1 2024 US consumer debt hit an eye-watering 17.3 trillion dollars. I refuse to accept that this is just a way of life, so what do we do?


How to think about your savings rate intentionally

We can all think of someone who didn't prioritize savings. . . probably a lot of people. Lets embrace being different, and do better than following some generic benchmarks on the internet. Figuring out your savings rate is easy, simply take how much you are saving every month and divide by your gross income. Now, the decisions we make with this information is where the magic happens. Are we at a point in our lives where we need to be saving a lot? The answer might be no! Are we trying to supercharge or catch up on retirement savings? Saving money period has to come before we start worrying about the best types of accounts to use - although that is an important conversation also. If we aren't happy with our savings rate, there are four ways we can make changes.

  • Earn more

  • Spend less

  • Eliminate debt

  • Reduce taxes


Monitoring progress

Colored tiles showing Sr, Br, Dr, and Tr

With the exception of earning more, the other solutions are all examples of metrics in the Elements financial monitoring system. How can we make good decisions around money and savings without knowing your numbers? If we are going to make comparisons, let's compare ourselves to our peers, no more random benchmarks off the internet. This is the beginning of optimizing our finances - the right accounts, interest rates, and investments won't do any good if we don't get started. Success won't come overnight, but it does happen intentionally.


Bringing it all together

Phone showing elements financial monitoring system

Let's close it out by taking inventory.

  • How to save only matters after you start saving.

  • Saving money is an important part of reaching our goals.

  • There are only so many levers we can pull if we want to adjust our savings rate.

  • Focus on optimizing our actions before optimizing our accounts


How much does inefficiency really cost in the long run? If you want to work with a professional to have more clarity and live your best life, consider giving us a call. Or better yet: Fill out your elements scorecard today



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Daley Financial Planning LLC (‘DFP’) is a registered investment advisor in California and other exempt jurisdictions. Registration does not imply a specific level of skill or training. Information provided on this site is for informational purposes only and is not tax, accounting, or legal advice, an offer or solicitation to buy or sell securities, or an endorsement of any entity or security. Past performance does not guarantee future results, and investing involves significant risk, including potential loss of principal.All information is provided ‘AS IS,’ with no warranties of any kind, express or implied. DFP disclaims all liability for any direct or indirect damages arising from use of this information. Consult a professional for personalized advice.

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