Savings rate — how to calculate and improve your savings rate

What is savings rate?

Savings rate is the percentage of your income that you save instead of spend. It's one of the most important personal finance metrics — more important than income level or investment returns.

Why? Because it's the only metric you have full control over. You can't decide how much the stock market will earn next year, but you can decide how much you spend on eating out.

How to calculate savings rate?

The formula is simple:

Savings rate = (Net income − Expenses) / Net income × 100%

Example

• Net income (take-home): 8,000 PLN
• Monthly expenses: 5,500 PLN
• Savings: 2,500 PLN
• Savings rate: 2,500 / 8,000 × 100% = 31.25%

What to include in "savings"?

Not just money in savings account. Include in savings:

• Deposits to savings accounts and term deposits
• Investments (ETFs, stocks, bonds)
• Contributions to IKE and IKZE
• Extra mortgage payments (above required payment)
• PPK contributions (your part + employer contribution)

What not to include?

• Mandatory ZUS contributions (you have no influence over them)
• Income tax
• Expenses that "feel" like savings but aren't (e.g., buying more expensive phone instead of even more expensive one)

What's a good savings rate?

Average savings rate in Poland is about 5–10%. If you're above 20%, you're already in the top tier.

10 proven ways to increase savings rate

1. Track every expense

You can't improve what you don't measure. Import transactions to Freenance and see where your money really goes.

2. Set budget with 50/30/20 method

• 50% on needs (rent, food, bills)
• 30% on wants (entertainment, clothes, dining out)
• 20% on savings and investments

This is starting point — ultimately aim for 30–50% on savings.

3. Automate saving

Set up automatic transfer for the day after payday. Money you don't see in account doesn't tempt you to spend.

4. Reduce biggest expenses

Three biggest expense categories are usually:

• Housing (30–40% of income) — consider smaller apartment, roommates, moving
• Transportation (10–20%) — public transport, bike, carsharing
• Food (10–15%) — cooking at home, meal prep, fewer restaurants

5. Negotiate higher salary

Increasing income by 1,000 PLN with fixed expenses means additional 1,000 PLN savings — direct savings rate increase.

6. Find additional income source

Freelancing, consulting, online sales — additional income entirely dedicated to savings dramatically raises savings rate.

7. Avoid lifestyle inflation

When you get a raise, don't increase expenses proportionally. Direct the difference to investments.

8. Cancel unused subscriptions

Review bank statement and cancel subscriptions you don't use. Freenance automatically detects recurring transactions.

9. Use 24-hour rule

Before any unplanned purchase over 100 PLN, wait 24 hours. Most impulse purchases disappear.

10. Monitor progress monthly

Regular checking of savings rate is motivating. Freenance automatically calculates your savings rate based on imported transactions.

Savings rate and FIRE

Savings rate is directly linked to time needed to achieve financial independence (FIRE). The more you save, the:

1. Faster you build capital — more money works for you
2. Less you need to live — lower expenses mean lower FIRE target
3. Double effect — both factors work simultaneously

That's why savings rate is more important than investment returns — especially at the beginning of the journey.

Track your savings rate with Freenance

Freenance automatically calculates your savings rate based on imported bank transactions. You just need to:

1. Import transactions from bank
2. Categorize income and expenses
3. Freenance shows your savings rate — monthly and annual

👉 Check your savings rate at freenance.io — free, without unnecessary complications.