How much of my income should I save?

Lesson 19 of 28 · Your savings rate · 3 min read · Reviewed 15 Oct 2026

Quick answer

Your savings rate is the share of take-home pay you don’t spend. Earning ₹1.5 lakh a month and spending ₹1.05 lakh is a 30% savings rate. Investing that ₹45,000 every month for 10 years at 12% grows to about ₹1.05 crore.

Your savings rate decides how fast your wealth grows more than any fund you pick. It is the gap between what comes in and what goes out.

Pay yourself first. Set the SIP to go out the day after your salary comes in, and spend what is left.

Key idea: Savings rate = (take-home pay − spending) ÷ take-home pay. EMIs count as spending; the principal part builds an asset.

Try the calculator and the one-question quiz on this page to check your own numbers.

Common questions

What savings rate is good?

There is no single number. 20% is a common starting point; 30% to 40% builds wealth much faster if your costs allow.

Should I count my EPF?

You can. EPF comes out of your salary before it reaches you, so add it to both your income and your savings if you want the full picture.

How do I raise it?

Increase your SIP every time your pay rises, before the extra money gets spent.

More lessons

Why starting early wins: Why does starting a SIP early make such a difference?
What inflation does to your money: How much will today’s expenses cost in the future?
The 1% that costs lakhs: How much more does a regular mutual fund plan cost than a direct plan?
Your emergency fund: How big should my emergency fund be?
How much life cover you need: How much term life insurance do I need?
Tax-free gains every year: How do I book equity gains tax-free in India?
What your FD really earns: What does a fixed deposit earn after tax and inflation?
How much to invest for a goal: How much do I need to invest every month to reach a goal?
Raise your SIP every year: How much difference does a step-up SIP make?
Your equity and debt mix: How much of my money should be in equity?
Health cover that holds up: How much health insurance do I need, and what is a super top-up?
Your home loan, paid off sooner: How much does prepaying a home loan save?
The minimum due trap: What happens if I pay only the minimum due on my credit card?
Your retirement number: How much money do I need to retire in India?
How long your money lasts: How long will my retirement savings last?
NPS: pension and lump sum: How much pension will I get from NPS?
PPF: tax-free and guaranteed: How much will my PPF be worth after 15 years?
Old or new tax regime: Should I choose the old or the new tax regime?
What your return really is: What is CAGR and how is it different from absolute return?
Gold: jewellery or investment: Is gold jewellery a good investment?
Nominees and a will: Is a nominee enough, or do I need a will?
The flat-rate loan trick: What is the difference between a flat rate and a reducing balance rate?
Your credit score: How do I improve my credit score?
What your EPF grows to: How much will my EPF be worth at retirement?
Your HRA exemption: How is HRA exemption calculated?
Wait a year before you sell: How are short-term and long-term gains on shares taxed?
Tax saved with 80C: How much tax can I save under Section 80C?

For learning only, not investment advice. Designed and built by people who have worked at India’s leading wealth management firms.