What Is a Good Savings Rate? We Hit 60% With 3 Kids

What is a good savings rate for early retirement or semi-retirement? It’s not always “the higher, the better”—but there are specific strategies that can help you increase it, if that’s your goal. In this post, I’ll share the exact ones we’ve used to reach a 60 % savings rate—while raising three little kids.

I’m writing this post for those of you who want to save more money—whatever the reason, and whatever savings rate you’re aiming for. Because I truly believe increasing your savings rate opens up so many amazing options—and helps you build a flexible future on your own terms. At least, that’s what it did for us. Here’s how.

How Do I Calculate My Savings Rate?

Your savings rate is one of the most powerful tools you have. Understanding what is a good savings rate starts with knowing exactly how to calculate it. Your savings rate shows what portion of your income you’re actually keeping.

Savings Rate Formula

So, how do you calculate your savings rate? It’s simple. Use this formula:

Let’s say you earn on average 8,800 and spend around 3,500 (like we do) per month—your savings rate would be 60% (like ours). That means you’re keeping 60% of what you make instead of consuming it. In this example that would be 5,300.

For comparison: the average savings rate in the U.S. typically hovers around 4–7%. In Germany (where we live) and other Western European countries, it’s closer to 10–18% depending on income level.

Our Actual Savings Rate

Right now, we’re on parental leave after welcoming our third daughter. Our income dropped temporarily since both Marc and I are staying home alternately while receiving parental allowance during her first year, and until she’s adjusted to daycare. Naturally, that affected our savings rate—it dropped from 60 % to 57 %.

Here’s our current breakdown:
Income: 7,650
Expenses: 3,280

Our expenses do not include our 1,800 mortgage, which we treat as an investment since we plan to rent out our home near one of the most expensive cities in Germany. But even if we added that mortgage to our expenses, we’d still achieve a savings rate of almost 34 % right now—and later on, when we’re both out of parental leave, we’d be at around 42 % or higher.

Even with three kids and a reduced income, we still maintain a solid savings rate—regardless of how our mortgage is treated in the calculation.

Free Tool to Calculate Your Savings Rate

Want to know what your savings rate is—without doing any math? Try our free Simple Bare Bones Budget Calculator. Just enter your income and expenses, and the tool will automatically calculate your savings rate as a percentage. It also shows you exactly how your money is distributed in a pie chart—plus, you can set savings goals and more.

What Is a Good Savings Rate?

Your savings rate is the single biggest factor in how soon you can stop working full-time. But what is a good savings rate if you’re aiming for true early retirement, a.k.a. FIRE (Financial Independence, Retire Early), or a more flexible path like semi retirement or Semi FIRE / FI (Semi Financial Independence), like we do?

What Is a Good Savings Rate for Early Retirement and Semi Retirement?

The short answer: the more you save, the sooner you can retire. While the average savings rate in many developed countries is between 4–18 %, that won’t get you to early or semi retirement anytime soon. For those pursuing financial independence, a savings rate of 30–50 % is often recommended. If you’re serious about early semi retirement in your 30s or 40s, many families aim for 50–60 % or more.

Here’s a general breakdown:

• 10 % = Basic financial stability
• 10-20 %+ = A good savings rate for traditional retirement
• 30-40 %+ = A solid target for semi-retirement within 10+ years (more or less)
• 50-70 %+ = The sweet spot for early retirement or semi retirement in your 30s or 40s

This is exactly what Peter Adeney, the Mr. Money Mustache blogger, showed in his legendary post The Shockingly Simple Math Behind Early Retirement. His famous chart shows how a higher savings rate slashes the number of years you need to work.

Why You May Not Need 60% Savings

A 60 % savings rate is amazing—but you don’t need to hit that number to make semi retirement work. In fact, most people aiming for semi retirement maintain a monthly savings rate between 30 and 40 %. That’s already powerful enough to give you flexibility.

Jess and Corey from The Fioneers teach that you can reach financial independence without a 50 % savings rate—and still live well along the way.

Why Your Savings Rate Is Not Everything

When people ask what is a good savings rate, they often focus only on the number. But while your savings rate is incredibly important, it’s not everything.

What truly matters is what you do with those savings that brings you closer to semi retirement—not just how much you set aside. We’ve found that our net worth tracking—using our Net Worth Calculator—and seeing how we build up assets over time, has been just as important as cutting costs.

When my husband Marc and I started our journey towards financial independence over five years ago, we were a family of three, consistently saving 50–60 % and more. Today, as a family of five, we’ve worked hard to maintain that savings rate, but we haven’t always hit it perfectly. Life changes. Budgets shift. And that’s okay. But we always focused on investing for passive income.

One of the biggest things we’ve learned? You Don’t Need To ALWAYS Save And Invest 50% For FIRE or semi retirement. What matters more is where and how you invest, and how consistent you are over time.

Our Family-Proven Steps to Hit a 60% Savings Rate With Ease

Hitting a 60% savings rate, especially as a family with kids, needs many intentional choices—without feeling like we’re constantly sacrificing. Here are the family savings tips that helped us most:

Dual Income Household

If you can, aim to bring in two incomes—at least outside of maternity or parental leave periods. Even part-time work or seasonal and freelance income can help significantly increase your monthly savings rate. Having two earners gives you more flexibility to save, invest, or even switch to one income later.

Free Up One Entire Income

In short: we live entirely on one income (also covering our mortgage payments) and save the other income. This one move helped us save thousands and reach semi retirement faster than we imagined.

We’ve detailed this in two posts— Living On One Income (In A Two-Income Household) and How To Become A One-Income Family (When You Earn A Second Income)

Keep Increasing Income

One of the best ways to save more money is to grow what’s coming in. Marc and I both pursued promotions, sold unused stuff, and are building our side hustle. Every bit of extra income was funneled straight into savings and investments.

Be a One-Car Household

Yes, it’s less convenient—but not as much as you’d think. We’ve always lived with just one small car, bought with cash (no car payments!). As a family of four, we’ve traveled, done errands, and managed everyday life with a single small vehicle. For our next car, we’ve set a clear price limit. That’s a frugal family tip that can save thousands.

Cut Unused or Unnecessary Fixed Costs

Unused subscriptions, unnecessary insurances, and “just-in-case” expenses add up fast. We reviewed all of our recurring expenses and found several we weren’t even using or needing—especially outdated insurance plans. What could you cancel without missing it?

Track Your Expenses

I can’t emphasize it enough: nothing is more important than tracking your expenses. If you don’t know where your money is going, you can’t control your savings rate. We track every little expense and review it regularly as a couple. This one habit keeps us aligned with our goals and helps prevent overspending.

Create a Budget

Once you know where your money is going you can start to map out a plan for your money and create a simple budget. If you’re new to budgeting, check out our post What Is a Line-by-Line Budget? Our Family’s €5,000/Month Plan or browse our budgeting post collection. A clear, realistic budget is your savings rate’s best friend—especially when you’re raising kids.

Keep Fixed Expenses at 50% or Less

Our fixed expenses are currently around 1,200 or just 16 % of our income (excluding the mortgage). Including our mortgage, we’re at 4,000 or 52 %. The key: keeping fixed costs like utilities, subscriptions, daycare, and insurances among others low. We cover this in depth in the post FREE Fixed And Variable Expenses Worksheet For Budgeting where you can find our free Simple Bare Bones Budget Calculator.

Limit Kids’ Expenses Without Limiting Them

Our experience is when it comes to kids, often less is more which we share in our blog post collection about our family life where we embrace frugality like Why We’re Living Without a TV—and Loving It.

We keep kids’ expenses low with secondhand clothes and toys or books, hand-me-downs, and frugal fun like free outdoor activities, libraries, and cooking together or tackling a DIY project at home. We also go out to eat as a family and to a park or zoo, but not every weekend. Also, each child has one hobby they truly enjoy, which helps reduce pressure during the week and spending while keeping their lives full.

Want Even More Frugal Family Tips?

Check out The Strategies We Use to Save Money in EVERY Budget Category, explore Travel Hacking For European Families: How To Travel For FREE, or browse our growing collection of happy frugal living blog posts for inspiration that’s practical and fun.

What Is a Good Savings Rate for You & Your Income?

So far, we’ve talked about averages and ideal numbers—but what is a good savings rate for you and your household? The answer depends on several factors: your income level, life stage, number of kids, fixed expenses, and how soon you want to reach early or semi retirement. Instead of chasing a perfect savings rate number, try creating your own personalized savings goal.

📌 Tip: Read The Average Saving Rate By Income to compare where you stand. It’s a helpful benchmark—just remember it’s not one-size-fits-all.

Mistakes to Avoid When Setting a Savings Rate

Many families struggle with saving more money—not because they don’t try, but because they fall into some common savings mistakes, just like us at the beginning. If you want to hit your goals, avoid bad financial habits, and watch out for following pitfalls:

• Setting unrealistic goals
  Aiming for a 60 % savings rate sounds inspiring—but if it’s not sustainable, it’ll burn you out fast. Here are our 7 Actionable Tips To Start Making “The Right Sacrifices” for saving money.
• Ignoring lifestyle creep
  As income rises, so do expenses—unless you stay intentional. We experienced that firsthand – you can read more about us here. Left unchecked, lifestyle upgrades silently eat into your savings rate.
• Not adjusting for inflation
  Inflation reduces your real savings power over time. That almost happened to us during the Corona pandemic when inflation was high. Reassess your numbers yearly to make sure your plan still works.
• Relying on budgeting alone
  A detailed simple budget is helpful—but without clear savings goals, strategies and reviewing your numbers, it won’t help much. Here are The Strategies We Use to Save Money in EVERY Budget Category.
• Comparing yourself too much
  Your personalized savings goal should reflect your life—not someone else’s timeline or income level.

Bonus: FAQ Section

What if I Have Debt?

Debt doesn’t mean you can’t save—it just means you need a balanced strategy. While high-interest debt (like credit cards) should be a priority, you can still start building savings.

We still have a mortgage—around 400,000—with a super low interest rate. While we could focus only on that, we’re also saving more to invest for passive income so we can be in a stronger financial position if we prioritize both at once.

Can I Save More Money With Kids Without “Limiting Them”?

Absolutely. In fact, some of the best frugal family tips we’ve learned are all about enrichment without overspending. We’ve shared our favorite Budget-Friendly Outdoor Play Activity Ideas My Toddlers Love Doing, Free Outdoor Toys Ideas My Toddlers Play With For Endless Hours, and shared the 7 Life-Changing Wins From Living On A Frugal Budget (As A Family) —because kids truly need less than we think to be happy and fulfilled. Mindset > money.

What Is a Good Savings Rate by Age?

Wondering what a good savings rate by age looks like? Read about Retirement Savings Goals by Age as a percentage of your annual income and as a savings checkpoint by age or use this rule of thumb:

• By age 30 → Aim to have saved 1x your annual income
• By age 40 → 3x your annual income
• By age 50 → 6x
• By age 60 → 8-10x

These retirement savings checkpoints help keep you on track—whether you’re working toward early or traditional retirement.

What Is a Good Savings Rate if Living Off One Income?

If you’re living on one income—especially with kids—any savings rate is a good savings rate. Even 5–10 % makes a difference. What matters most is that you’re making room to save something, while covering your family’s needs. We share more about our journey in How I Spend My Money On What Matters Most & Skip The Rest.

Can I Reach Semi Retirement With a 20% or 30% Savings Rate?

Yes! You may not reach semi retirement in 10 years more or less, but with a consistent savings rate of 20–30 %, you can absolutely build your investments toward financial freedom. In fact, most semi retirement strategies are well within reach with a savings rate like that.

Now that you have the answer to “what is a good savings rate”, you know what it looks like—and how we made 60% work with 3 kids—it’s your turn. Start small, take it one step at a time, stay consistent, and you’ll be surprised how quickly your savings add up. Even saving just 10% (more) can change your entire trajectory. You’ve got this!

👉Discover how our free Simple Bare Bones Budget Calculator can help you boost your savings rate and reach your goals faster.

🚀 Now it’s your turn: What’s one small change you’ve made (or want to make) to boost your savings rate? Drop it in the comments to inspire others!

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Title image source: Photo by Annie Spratt on Unsplash