How do we calculate our Savings Rate?

We (Mr. and Mrs. CF) just finished our discussions and thoughts on how to calculate our Savings Rate going forward (and correct some older results). The outcome of how we calculate our Savings Rate is added in this new page on our blog, it may explain a few things you are wondering about, and perhaps could help you too with determining your Savings Rates.

How do we calculate our Savings Rate?

The reason we had some discussions is because of our latest Real Estate venture. We have successfully rented out the two units and commercial workshop in our new property to some lovely people. All associated funds are coming in and are going out of our checking account. Because it’s one property, expenses for mortgage, maintenance and operating costs are shared between our personal use and our Real Estate venture. These can sometimes be hard to split, but we decided to give it a go anyways.

How do we calculate our Savings Rate?
How do we calculate our Savings Rate?

What does this have to do with our Savings Rate? Well, because we were not sure how everything was going to work out we added everything into our Savings Rate calculations (incomes and expenses). Now that we have completed our review of the assessed values of the properties (i.e. the “WOZ waarde” and the “Marktwaarde Taxaties”), we now have decided how to split the expenses like mortgage interest, insurance and maintenance. This is very important as it will affect how we will submit our taxes for 2016.

Splitting Rental Income from Labour Income

We have now completely pulled out and split the investment income and expenses related to real estate from our personal Saving Rate calculations. The corrected version, with changes starting from July 2016, is shown in the new overview below. If you are curious about the changes, you can also look at the one originally prepared for the Saving Rate October 2016 post. However, it pretty much boils down to the fact that we actually have had a slightly higher YTD Savings Rate than initially thought. Now that is always very good news! This actually also makes sense, as we moved to a smaller house as of July and anticipated our housing cost to go down. The data is now somewhat distorted because of the moving costs, refund of the rental deposit (see low rate in July and peak in August) and initial maintenance/decorating costs, but we might be able to achieve a 60% Savings Rate next year because of downsizing our home (fingers crossed).

Going forward, we will use the (in our opinion) correct personal Savings Rate. But as a bonus we will also start reporting our monthly Real Estate income and expenses (for those of you whom are interested in this investment opportunity). More details to follow in December.


  1. Thanks for explaining the change in savings rate. Just under 50% is really impressive and I love seeing that you’re stretching yourselves for next year. 60% would be awesome if you can reach it. Thanks for sharing!!!

    1. Helle MSM,
      Actually, only the last two months were under 50%, the yearly overall is still running around 58%. Not sure what will happen this month, there may be a major purchase at the end.
      60% for next year will be a stretch, but you got to aim high 😉

  2. Interesting to read about how you have changed the calculations. It shows everybody will probably have it’s own way of measuring. We currently only use job income since we treat dividend income separate.
    I’m planning on a revision on how we measure our expenses, savings ratio and probably net worth. The latter is not something we calculate yet, but would like to do so for next year.

    1. There are certainly many ways to Rome! But we should now have a clean savings rate again what only contains income from work and some benefits, as well as expenses to live life.
      And you are right, you net worth is another beast. Good luck finding out what works for you, if you want to discuss a bit, just let us know!

  3. Congrats on that huge savings rate in August! Haha. A very solid month for you, well done. I agree with where you’re coming from about changing how you calculate the savings rate – it sounds like you’re now making it easier to prepare your tax declarations too? 2 birds with 1 stone.

    Good luck with the 60% savings rate next year!


    1. Hey Tristan,
      Yes, we are definitely killing two birds with one stone. It really was necessary to make this change. It will also allow for better tracking of how our real estate is doing. Just took a bit of work to get here.
      Really hope to make that 60% next year, but I’ve already found a couple of reasons this weekend why we likely won’t (couple of maintenance items on our home that need more urgent attention than anticipated). Such is life, will revisit the target at the end of this year.

  4. Thx for the clarification. I read the details as well. Interesting how you see that expenses can have a negative value: you sell an item on ebay, you get money back for a child day care. In our system, that would be an income.

    On the mortgage side if things, we have one calculation with and without. As I do not count my house in the amber index, I decided to exclude the mortgage payment.

    Reading the post, I see where I go wrong: interest payment on the mortgage is included in the all in savings rate. This is very small, 1,2 K per year. The error is small enough to ignore for me. (I found out I overlook a 0,6K) saving as well.

    Interesting discussion topic for the meetup…

    1. Would love to discuss the topic on the next meetup! There are so many ways to calculate the savings rate, but considering Mrs CF’s background, we try to primarily use accounting rules. Therefore the permitted negative expenses rather than using it as income, as far as I understood it would work the same way in bookkeeping for businesses.

  5. Those savings rate figures look great, and a 60% savings rate next year sounds like a nice goal! Might be aiming for something similar, but should first look into how I calculate my savings rate in more detail. I am not including passive income through capital gains excluding dividend yet.

    1. Still, it will be though to make the 60%, there are some costs associated with our own house coming up and we have not had many holidays this year…..
      As noted in our new savings rate page, we have now pretty much excluded all investment incomes (passive of capital gains) and purely look at income from work and expenses to live (crowdfunding is the only exclusion).

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