Reading today in the Globe that the personal savings rate in Canada is up to 4.7%, and 4.2% in the United States.
Personal savings rate is a metric that I've not been able to pin down precisely. It seems there are different ways to calculate this, and I'd like to hear from you what are the generally accepted methods, preferably per Statistics Canada.
For my own rough purposes, I've used gross income as the denominator, as it is a simple number that is not subject to as many shades of grey as net income (which seems to be the basis for most accepted measures of personal savings rate).
My household:
-Contributes 9% of gross to RRSP's. Payroll deduction at source. Overall, our RRSP constribution room is maxed out.
-Saves 32% of gross as cash savings. Cash savings is the difference between our cash inflows (paycheques and tax refund, basically), and expenses. Cash savings either remain in cash, or are directed to additional mortgage reduction and/or lump sum RRSP payments. No individual stocks as yet - likely to pay off the mortgage before branching out beyond index/ETF.
-Increases home equity by 6% over the next year through regular mortgage payments, based on current bi-weekly payment amount.
So, 41% of our gross income goes directly to increasing financial assets.
6% of gross income goes toward increasing home equity.
Combined, net worth increases at 47% of gross income, in 2009.
Our savings rate is possible due in equal part to two middle-class salaries, and a frugal, even thrifty lifestyle. We spend our money very carefully.
We are fortunate to be DINKS for the time being, and this pleasant financial situation is not sustainable should either half of that anacronym change.
What is your take on personal savings rate?
Personal savings rate is a metric that I've not been able to pin down precisely. It seems there are different ways to calculate this, and I'd like to hear from you what are the generally accepted methods, preferably per Statistics Canada.
For my own rough purposes, I've used gross income as the denominator, as it is a simple number that is not subject to as many shades of grey as net income (which seems to be the basis for most accepted measures of personal savings rate).
My household:
-Contributes 9% of gross to RRSP's. Payroll deduction at source. Overall, our RRSP constribution room is maxed out.
-Saves 32% of gross as cash savings. Cash savings is the difference between our cash inflows (paycheques and tax refund, basically), and expenses. Cash savings either remain in cash, or are directed to additional mortgage reduction and/or lump sum RRSP payments. No individual stocks as yet - likely to pay off the mortgage before branching out beyond index/ETF.
-Increases home equity by 6% over the next year through regular mortgage payments, based on current bi-weekly payment amount.
So, 41% of our gross income goes directly to increasing financial assets.
6% of gross income goes toward increasing home equity.
Combined, net worth increases at 47% of gross income, in 2009.
Our savings rate is possible due in equal part to two middle-class salaries, and a frugal, even thrifty lifestyle. We spend our money very carefully.
We are fortunate to be DINKS for the time being, and this pleasant financial situation is not sustainable should either half of that anacronym change.
What is your take on personal savings rate?