Have you ever thought about how much you save versus how much you spend from your salary? Seriously, I mean REALLY thought about it. Like, “I’m saving X% versus spending Y% of my income.” No? Well that is exactly what we are going to do here. It’s important to figure these percentages out, especially when it comes to building a budget for yourself.

Luckily, this seemingly complicated subject can be looked at in a relatively simple way. Let’s break the two down and see how we can make them work together in our favor.


There are a lot of “best practices” when it comes to socking away some savings. Topics range from WHY to do it, WHEN to do it, all the way to HOW to do it. The gist of the WHY being that you want to save towards large purchases, your retirement, and that unexpected rainy day. The WHEN of saving is largely determined by your current financial situation, based on any number of circumstances, but ultimately starting with your current income. The commonplace HOW, however, stays the same for the most part: Take your income, expense your necessities, figure out how much you want available to spend on non-necessities (“disposable income” – coming up next), then save the rest.

Unfortunately, our savings usually take the same place in our thought process as they do in the previous sentence: last. That is why we plan ahead by saving for the life we want. It is generally “best practice” to save 10%-15% of your income. Read more about that here. It’s not easy to achieve that savings rate for many people; however, your overall goal by the end of reading this should be to have a high-level plan in place for how you can put more into your savings now than you have been previously. Even the smallest change in lifestyle will help you achieve your personal profitability goals.

Disposable Income

Disposable income is any money you have left over after putting money towards taxes, paycheck elections, necessary expenses, and savings. Notice the switch in rank here, though. Disposable income is now taking its rightful place – AFTER savings. In no way do I advocate extreme deprivation of joy in order to pump up your savings account. Nor do I like the idea of nickel-and-diming your way through life. However, if disposable income comes before savings, then your savings account will inflate slower than a blow-up mattress being inflated by mouth… and it will feel just as difficult and hopeless.

Putting disposable income after savings allows you to sock away some money first, then go about enjoying your life. Again, it just takes a little planning.

Calculating Savings and Disposable Income

Figuring out what to save versus what to spend can be easier than most people think. A lot of people try to “budget,” but a lot of times “budget” just means that they stop and think for a slight moment before making purchases. Rarely does “budget” actually mean crunching the numbers. So let’s do that now. For the rest of this post, we will build a real, high-level budget together. First, click the link below for the calculator, then come back for the directions.

Savings & Disposable Income Calculator

Calculator Directions

This calculator has been pre-filled with example numbers, including salary, tax bracket, and expenses on the first tab of the workbook, called “Salary & Expenses.” This first tab is where you will put all of your own information regarding salary and expenses. I left three open “Other” expense slots, just in case, but feel free to add, delete, change, consolidate, or edit any of the expenses.

Click here to find out what tax bracket you should use. 

Once the entire first tab is filled in, switch over to the tab called “Savings & Disposable Income.” Here you will find numbers related to your net pay, savings, and disposable income. Notice that disposable income comes last on the sheet! On that tab, you can adjust the annual savings rate by entering a value from 0%-100% – I started it at 10% for you already. The entire tab updates based on the numbers you input on the first tab. This tab is locked, just so no errors accidentally occur in the formulas. Should you need to unlock it to make adjustments, just right-click on the tab at the bottom of the workbook and click “Unprotect Sheet” – there’s no password.

Calculator Explanation

The logic and flow behind the calculator should be this, in first person:

  • Here’s my annual salary
  • Based on my salary, the tax bracket I fall into, and the elections I have withdrawn from my paycheck, I get my net income
  • Unfortunately, I have necessary expenses in my life, part of what millennials would call “adulting,” plus some unexpected expenses that arise every once in a while
  • My net income minus my total expenses gives me a certain amount of money with which I can decide whether I should save or spend
  • I need to save money, so I’ll go ahead and test out some different savings rates to see how much I would save per year and per month
  • Great, I’m going to save X% of my income being X amount of dollars… so what do I have left to spend?
  • OPTIONAL #1 (preferred): Wow! I don’t need that much to spend on Amazon items. I should increase my savings rate!
  • OPTIONAL #2 (less than ideal): Savings, schmavings! I’m going to buy that fifteenth iteration of the Amazon Echo this year!

Once you settle on a good balance between your savings and disposable income, you can make better financial decisions as to where you will spend the money that is left over. Try to stick to that amount without having to draw from your savings.

Keep in mind that this calculator only takes into account one salary and one tax bracket, so you can adjust numbers as needed. Also, this is meant to be a high-level view. Things may change month-to-month, but try to stay disciplined!

I really do hope that you find this tool useful! For the Excel geeks like Wayne and me out there, have a field day changing it to fit your needs. For everybody, if you have any questions or comments, please leave them at the end of the post! Happy saving!