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How much of my income should I save?

By Cameron Thomson ·
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Determining the right amount of cash to save is an important financial skill. By utilising proven methods, you can strike the perfect balance in your savings strategy. 

The 50/30/20 approach

The 50/30/20 approach to saving is one of the most commonly used tactics. Basically, 50% of your spending should go towards needs (rent, food, bills, etc.), 30% towards wants (entertainment, travel, dining out), and 20% towards savings. 

So how does this work in practice? Say you make $4500 per month after tax—your resulting split would be:

Needs
Wants
Savings
$2,250
$1,350
$900

How strict is this savings tip?

Not at all! Some people may want to swap these numbers around if they're more concerned with saving and not as bothered with wants.

This could mean a 50/20/30 make-up where you spend a month saving extra and alternating back to 50/30/20 the following month.

By moving the numbers around to a 50/20/30, your $4500 a month split would look like this:

Needs
Wants
Savings
$2,250
$900
$1,350

Age based savings

Another way of determining how much of your income you should save is by age. Your savings goals are likely to evolve as you progress through different life stages and this can be a useful guideline. It could look like:

In your 20s
In your 30s
In your 40s and 50s
60s and beyond
You could aim to save 10-15% of your income. Focus on building an emergency fund and starting retirement savings.
You might save 15-20% of your income. Balance between short-term goals (like buying a home) and increasing retirement contributions.

Aim for 20-25% savings. Accelerate retirement savings or build up an offset account if your home loan allows it.
Hopefully you’ve saved a nest egg, so your % can drop. Save 10-15%, focusing on maintaining wealth and preparing for retirement expenses.

Retirement goal focused savings

Another way you can calculate how much you should save is by setting retirement goals and trying to meet milestones by certain ages. These can look like: 

  • 1x your annual salary by age 30
  • 3x by age 40
  • 6x by age 50
  • 8x by age 60
  • 10x by age 67

How can you supercharge your savings?

After you’ve figured out the split that makes sense for your situation, knowing where to deposit your savings is the next step. 

If you’re looking to save over the short term, then a high-interest savings account with a good introductory rate account could be the most helpful. These accounts offer some pretty high rates for 3 to 6 months. A shorter term deposit could also be advantageous. 

Alternatively, if you’ve got a long term goal, a ‘conditional’ bonus rate savings account could be a good option. By fulfilling certain conditions—like regular monthly deposits or no withdrawals—you’ll get a higher bonus rate. It’s important to note that, should you fail to meet these conditions, then you’ll revert to a lower or no interest base rate. 

Comparing savings accounts

Knowing whether or not the savings account you’re aiming for has an above-average rate can be difficult. That’s why the team at Mozo have crunched the numbers and found the average rates for the 274 savings accounts we track.

  • All Ongoing: 3.50%
  • Only Bonus: 4.61%
  • Only Introductory Rates: 5.01%
  • Only Unconditional Rates: 1.40%

* Personal account of $10,000, correct as of 24 July 2024

Want to compare savings accounts? You can check out our savings accounts hub, if you prefer, check out some of the providers in the table below… 

Savings account comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 274 savings accounts.
Last updated 27 July 2024 Important disclosures
  • Mozo Expert Choice Badge
    Savings Maximiser

    5.50% p.a. (for $0 to $100,000)

    0.55% p.a.(for $0 and over)

    Yes up to $250,000

    For customers who have an Orange Everyday account, deposit $1000 into a personal ING account, make 5 eligible transactions and grow their nominated Savings Maximiser account each month.

    Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^

    Compare
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    Details
  • Reward Saver Account

    5.25% p.a. (for $0 to $1,000,000)

    0% p.a.(for $0 and over)

    Yes up to $250,000

    Intro bonus rate of 5.25% for balances up to $1,000,000 for the first 4 months, reverting to 3.25%. Minimum deposit of $50 and no withdrawals.

    Introductory bonus rate for balances up to $1,000,000 for the first 4 months. Minimum deposit of $50 and no withdrawals. Start your account online in under 10 minutes and earn interest on balances up to $1,000,000 (T&Cs apply). No monthly account fees, helping you save smarter and faster.

    Compare
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    Details
  • Savings Account

    5.35% p.a. (for $0 to $250,000)

    4.75% p.a.(for $0 to $1,000,000)

    Yes up to $250,000

    Bonus variable rate is available for the first 4 months.

    Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.

    Compare
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    Details
  • Mozo Expert Choice Badge
    High Interest Savings Account

    5.75% p.a. (for $0 to $250,001)

    4.40% p.a.(for $0 to $250,001)

    Yes up to $250,000

    Bonus rate for the first 4 months from account opening

    Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account. No Account keeping fees. No minimum balance. Support Aussie farmers with every dollar you save.

    Compare
    Go to site
    Details
  • Savings+Bonus

    5.00% p.a. (for $0 to $250,000)

    2.00% p.a.(for $0 to $250,000)

    Yes up to $250,000

    Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.

    Earn a generous interest rate on your at-call savings (T&Cs apply). Interest is calculated daily and paid to you monthly. A $5 monthly membership fee will not apply if your total account balances with First Option Bank exceed $1,000 or you have a credit card or loan with the bank.

    Compare
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    Details

^See information about the Mozo Experts Choice Savings Account Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Cameron Thomson
Cameron Thomson
RG146
Money writer

Cameron has a Bachelor of Creative Writing and History, and a background in broadcast media from his time at 2SER Radio. This diverse set of skills has informed his analytical yet creative approach to dissecting financial data and uncovering long-term trends in consumer finance. Cameron is RG146 certified for Generic Knowledge and keeps a keen eye on current and historical deposit and savings rates on the Mozo database. Cameron is also interested in tracking the investment space, particularly share trading platforms, to help Aussie consumers save and invest their money more wisely.

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