After I wrote the last post on living paycheque to paycheque, I opened up the floors to the readers and their opinions.  While I expected there to be a discussion, I didn’t expect the debate to be so heated.   One thing I learned from some of the comments is that I did not account for people who really “need” to live paycheque to paycheque.  That is something that I overlooked as the people around me mostly make relatively high salaries but many live well beyond their means.  While it is their choice to live the way they wish, I believe that everyone should take responsibility for their actions.

Another reader suggested that I create a poll for the readers here at MDJ because he suspects that the incomes are higher than the average Canadian family.  The poll below is completely anonymous, but will give us a good idea of reader salary range and savings rate.

The poll options are fairly lengthy, but should be intuitive.  Simply pick your salary range with the corresponding savings rate on your gross income.  I’ll leave it up to you whether you use family or individual income.  Personally, I combine my finances with that of my spouse so I would add up our gross family income and determine the savings rate on that income.  What’s considered savings? I like to keep things simple, so I simply add up my contributions to RRSP, TFSA, non-reg, mortgage prepayments, and/or transfers to high interest rate savings in a year.

For example, if our gross family income is $120k and we saved (as per definition above) $20k over the year (or $1.67k/mo) , then our savings rate would be (20/120)x100 = 17%.

Please take a second and vote below.  If you can’t see the poll below, please click here to vote.

What is your gross income and how much do you save?

View Results

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Thanks for participating in the anonymous poll!

57 Comments

  1. Brian Poncelet, CFP on September 28, 2010 at 12:04 pm

    Hey FT,

    This is article is one of the best yet!

    I deal with a number of government employees and people who have no pension.

    Government employees currently (here in Ontario…OMERS) will be expected to have about 10% OF THEIR GROSS INCOME TO SUPPORT THEIR PENSIONS IN THE NEAR FUTURE.

    This means they get to spend what ever is left after taxes a deductions, etc!

    Also, not talked about is they have great benefits…which cost a lot of money. Like when they get sick and need time off work. Risk management.

    So a lesson here is you (people not working for the government) have to save a lot of money! If you want to live in the same lifestyle.

    An example is a 35 year old (making $80,000) wanting to retire at age 65 with about $65,000 in today’s money, will have a value of over $1,300,000 in his pension. Of course, his wife only gets 60% of that (his paycheque) when he dies.

    “OMERS is one of Canada’s largest pension plans, with more than $48 billion invested in a wide range of companies and assets around the world. OMERS provides retirement benefits to 400,000 members across Ontario.” … from their website.

  2. Joel on September 28, 2010 at 12:07 pm

    I was saving around 50% of my take home pay of my “ok” income but I just purchased my first home and I’m not sure what I’ll be able to save after that. I have some renters so hopefully that will help!

    There seems to be a lot of incomes over 100k$, I hope to be there someday!

  3. cannon_fodder on September 30, 2010 at 8:30 am

    I just saw this poll and I didn’t see much mention as to including investment income in the calculation. It seemed geared towards salary.

    I found it very interesting to consider whether mortgage principal payments are to be counted as “savings” or not. I fall into the “not” camp. I also wouldn’t want to try and make myself feel better by calculating the difference between the least aggressive payment schedule vs what I have and take the difference as savings. It’s a personal choice but I only view prepayments as falling under savings.

    Mortgage payments aren’t discretionary. Prepayments, like RRSP, TFSA, RESP and nonregistered accounts are discretionary. That’s how I distinguish between the two perspectives. But I wouldn’t want to try and change the opinion of anyone who holds the opinion that any debt reduction payment is savings. Thus I don’t count credit card payments or car loan payments as savings. That’s debt reduction plain and simple.

  4. Sam on October 2, 2010 at 4:36 pm

    I have been saving over 20% of my gross income for all these years. I am now in my 50s and got so used to saving that I have almost forgot how to enjoy spending. I look at myself and feel there is no bigger pathetic person than me.

    So, my advice to all those youngsters: Saving is good but don’t make it as an obsession (% of Gross income, a million dollar mark etc. etc.) otherwise you will end up like me. Lots of money but don’t know to spend or ‘enjoy’ spending. During your journey to saving, if you hit the target well and good but do not stop enjoying life.

  5. Paul on October 3, 2010 at 11:18 pm

    I don’t really save any money right now. It all goes into RRSP, TFSA and mortgage. Hopefully, I’ll be able to save eventually.

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