Savings Rate in India — Why 20% Isn't Enough and How to Save More

## Why savings rate beats everything else The savings rate is more controllable than investment returns and more impactful than specific fund selection. A mediocre investor with a 35% savings rate will retire richer than an excellent investor with a 10% savings rate. ## Calculating your true savings rate **Include:** - EPF (employee contribution + employer match) - All SIPs and investments - PPF contributions - Principal component of EMIs - Any recurring savings (RD, sweep FD) **Exclude:** - Interest payments on loans - Insurance premiums (except term + health — these are necessary costs) ## Practical ways to increase savings rate in India 1. **Automate on salary day**: Set SIPs to debit on the 5th (after most salaries credit on the 1st). Saves before spending. 2. **One SIP per raise**: When you get a raise, immediately increase one SIP by 50% of the increment. Lifestyle inflation is the enemy. 3. **Cancel unused subscriptions**: An annual audit of subscriptions, gym memberships, OTT services. 4. **Reduce eating out**: In metro cities, this can free ₹5,000–15,000/month easily. 5. **Review insurance portfolio**: Many Indians pay for ULIPs, endowment plans, and money-back policies that deliver poor returns. Replace with term + ELSS for the same cost.