How do I calculate my wealth-building rate?

How much of the money you earn do you save and invest? Do you save any of the money that you earn each month?

The average savings rate in the United Kingdom is 6%. In the USA it is 7.9%. Do you know if you are saving more or less than that?

Your savings rate is one of the key indicators of when you can retire and how good your finances are! With this number you can predict how long you have to work in paid employment.

It’s all about the gap

First let’s see if you have a gap!

If you haven’t already, read How big is your gap and how to track your spending before reading further.

Savings versus investing

Last year on Rebel Finance School there was lots of confusion over savings rate. What you are doing with the money that you’re not spending each month? If you are saving £100 a month towards a holiday or Christmas presents then surely that is savings?

Yes, technically it is saving but you are just saving for future spending not investing or building wealth by buying assets.

Saving for a holiday is not going to sort you out financially, it is just going to pay for a holiday.

We have redesigned our tracker, our language and the course to make this distinction. The thing you should be interested in is how much of your money are you investing rather than saving.

Are you actually building wealth with your savings or just saving to spend?

It’s all about your wealth-building rate, not your savings rate.

Why bother calculating my wealth-building rate?

If you save and invest 50% of your income each month then your working career will be 17 years! How do I know that without knowing how much you earn?

Your wealth-building rate is actually far more important than the total amount of money you earn.

Let’s compare two different individuals. The first is a well-paid executive that earns £200,000 a year. She has a lavish lifestyle with lots of holidays and nice cars. She invests £20,000 a year.

The second individual is a builder. She earns £20,000 a year working on a building site. She has a modest lifestyle and lives within her means, investing £2,000 a year.

Who can retire earliest? How long are their working careers?

The instinctive answer would be the executive because she is saving more each year. She is saving ten times as much as the builder. However, she has a very expensive lifestyle and needs far more money to retire than the builder ever would.

The actual answer is that they would both have the same predicted retirement date. This is because they are both investing 10% of their income. If we assume that they will spend the same amount in retirement as they do whilst working we can accurately predict when they are able to retire!!

If you know your wealth-building rate (as a percentage of how much you earn) you can predict how many years you have to work. Crazy right?!

How do you calculate your wealth-building rate?

Each month you earn a certain amount of money after tax. Most people spend everything they earn! However if you keep some of that money and put it into investments then you have a wealth-building rate.

As an example let’s say you earn £3,000 a month. If you take £300 of that money and put it into investments you have a 10% wealth-building rate.

If you take £1,000 of that money and put it into investments you have a 33% wealth-building rate.

If you take £1500 of that savings rate and put it into investments you have a 50% wealth-building rate!

Let’s say you wanted to work out your wealth-building rate for a certain month, let’s pick May. You need two numbers to be able to do this.

A) How much you earned in May.

B) How much you put towards building wealth in May.

Some guidance on this… A) should be straight forward – check your payslip or if you’re self-employed add up everything you earned in the month (AFTER you’ve put money aside for income tax).

But for B) you might be thinking what the heck counts as building wealth.

Help is at hand (and we have a handy template for you to figure this all out later on in this page)! The following things count as building wealth:

  • Emergency fund contributions
  • Your contributions to your work pension
  • Your employer’s contributions to your work pension
  • SIPP contributions
  • Stocks and Shares ISA contributions
  • Other contributions/asset purchases

Now you should have numbers for A) and B)

Then you compare A) how much you earned (this is after tax by the way) and B) how much you put towards building wealth to give a percentage of how much you are putting towards looking after future you.

For example, if you earned £1000 and put £200 in investments then your wealth-building rate is 20% (200/1000). In this example you are using 20% of what you earned to buy freedom.

​IMPORTANT! We coached someone last year and he was very despondent because he thought his savings rate was zero. He was putting £200 a month to buy investments and counting this as spending. Any money you use to buy assets is NOT spending. Do not include this in your spending figure. Any money you use to save for future spending (e.g. holidays, car etc.) is spending for this month. You can either include this as spending each month or wait till you spend it on the holiday and put it in your figures in one go.

Monthly fluctuations

Your wealth-building rate is pretty much guaranteed to change on a month-to-month basis. Each month, Katie and I used to calculate how much we invested of our earnings. Then over the year we could calculate an average.

One reason for the monthly fluctuations is down to your spending. Some months you might have higher outgoings, buying things like glasses or medical bills. Some months you might have lower spending and be able to invest more. Your wealth-building rate will change with your spending.

This means that you need to track your spending each month. This will massively influence your wealth-building rate. If you don’t have a gap between how much you earn and how much you spend you won’t be able to build wealth. It’s that simple.

Read this page all about how to track your spending

The other reason for your wealth-building rate changing is fluctuations in your earnings. If you’re self-employed or a company director you probably have uneven income each month. There might be months where you have a zero wealth-building rate because you didn’t earn as much and other months where you have close to a 90% wealth-building rate because you had a very good month in your business. In this case once you have a few months of tracking your wealth-building rate you can start to average out over the last quarter, six months or year.

Katie and I recommend using a tool like money dashboard (UK), credit karma (USA) or personal capital (USA) to track your spending each month and to calculate your savings rate.

We then treated it as a game to see if we could continually improve our savings rate and put more of our money into our investments. We were prioritising buying our freedom over buying extra stuff.

Help is at hand – free template
Katie has been working hard to create a template to help you track your wealth-building rate! She has built a spreadsheet for you to use to make this easy.

Katie and I have realised that not everyone is like us and has a nerdy love of figures, spreadsheets and data visualisation! That is why Katie built the spreadsheet and we have created a video to show you how to use it.

You can download the spreadsheet and watch the video:
How big is your gap calculator

Once you’ve downloaded the spreadsheet, input your figures and it will calculate your wealth-building rate for you.

​Katie and I would love to know what you think of the template and if it is useful for you. Please leave a comment below or send us a message and let us know what you think. We just want to help you take control of your finances!

​Huge thank you to Nate @ NateMeharg.com for creating the Numbers and Google Sheets version.


The better informed you are about your spending, where your money is going and how much you are investing for your retirement the better able you are to plan for a bright financial future!

Saving for ………….

During the 2022 Rebel Finance School there was a lot of confusion over saving for Christmas, birthday presents or the next car and how to calculate for that in the spreadsheet. is it savings? I am after-all saving for something!

The way the Donegans look at this is that these types of savings are for future spending. Or as Wendy, Derek and Claudia from the Rebel Facebook group so rightly pointed out it is budgeting not saving.

You are setting aside money / budgeting for a future purchase. This isn’t saving for your financial future, for investing, for your retirement, it is a different thing.

For example you decide that you are going to save £50 a month towards Christmas so it doesn’t come as a shock and you have to buy all the food and presents when it happens. This is brilliant budgeting. We LOVE IT. Come Christmas what happens to all that money you have “saved”? It gets spent in one fell swoop. Gone. Disappeared. Enjoyed. Blown. Gifted. It can’t really be counted in your wealth-building rate as you are planning on spending it.

Katie has created a new version of the tracker for this year that now focuses on wealth-building rate. It takes the money you are using for investments to show the percentage and ignores money you are saving for future spending.

Take action

Sometimes a goal like reaching financial independence can seem so far off that it puts people off starting! This happens so often that I wrote a whole article about it called the Insurmountable Mountain!

What people don’t realise is that creating an exceptional life starts with the smallest of actions. making a call, sending an email, tracking your spending. These small daily actions compound over time to build the life of your dreams.

All you need to do is start today and take action. Download the spreadsheet, work out your savings rate and discuss it with a friend, your partner or your cat.

Take action each and every day and you will be AMAZED at how far you got in a year. Do something today that future you will be proud of!

How to get involved?

You may have noticed Katie and I have got very creative recently and are producing more and more content to support you.

  • We have created the Rebel Finance School to help you get to grips with your finances. It is running right now or you can join the mailing list for the next version
  • The Rebel Entrepreneur podcast is designed to help you build your own business with out using debt. If you have never hear the podcast then check out the episode 5 ways to build a business with no debt on either Apple Podcast, Spotify or Google Podcasts
  • Sign up to my mailing list to stay up to date with everything we are up to and get the most out of the blog. I will randomly email you when the mood hits me. You can leave anytime if you get bored of me!
Katie and I wish you a wealthy, healthy and happy future.