Building wealth is often presented as a simple formula: spend less, save more, and invest the difference.

The problem is that “save more” isn't always practical advice.

For many Canadians, there isn't much room to dramatically cut spending. Housing, groceries, transportation, childcare, debt payments, and other everyday costs can make aggressive saving feel unrealistic.

A more sustainable approach is to focus on your savings rate — the percentage of your income that you direct toward savings and long-term financial goals — and increase it gradually over time.

A small change today can become a meaningful change over the course of a career, particularly when your savings rate rises as your income does.

What Is a Savings Rate?

Your savings rate is the portion of your income that you set aside rather than spend.

For example, if you earn $80,000 a year and direct $8,000 toward savings, investments, or other long-term financial goals, your savings rate would be 10%.

The exact percentage that makes sense depends on your circumstances. Someone paying down high-interest debt may have different priorities from someone with a fully funded emergency fund and decades until retirement.

That's why the goal doesn't have to be reaching a particular number overnight.

Instead, think of your savings rate as a dial you can gradually turn upward.

Why Increasing Your Savings Rate Matters

Suppose your income increases over time but your spending rises at exactly the same pace.

Your lifestyle may improve, but the amount you're directing toward your future may not.

Increasing your savings rate creates a different dynamic.

As your income grows, you capture part of that additional income for your longer-term goals instead of automatically allowing your expenses to grow alongside it.

This doesn't necessarily mean giving up the things you enjoy. It means making sure that some of your financial progress is converted into greater financial security.

The difference can become particularly significant over a long period because money saved and invested for long-term goals can potentially benefit from compound growth.

You Don't Have to Make a Dramatic Change

One of the biggest advantages of focusing on your savings rate is that you can increase it incrementally.

If you're currently saving 10% of your income, moving immediately to 25% may require substantial lifestyle changes.

Moving from 10% to 11%, however, may feel much more manageable.

Once that becomes your new normal, you can consider another increase.

For example:

10% → 11% → 13% → 15%

There is no universal schedule you need to follow. The point is to create a sustainable progression rather than relying on a single burst of motivation.

Over several years, those small adjustments can materially change how much of your income is being directed toward your future.

Use Raises to Increase Your Savings Rate

A pay increase is one of the easiest opportunities to increase your savings rate without necessarily reducing your current standard of living.

Imagine you receive a 5% raise.

Rather than treating the entire increase as available spending money, you could direct a portion of it toward your long-term goals and use the remainder to improve your current cash flow.

This creates a useful balance: your lifestyle can still improve while your financial progress accelerates.

The same principle can apply when you change jobs or move into a higher-paying role.

As your earning power increases, consider increasing the percentage you save before your new income becomes fully incorporated into your regular spending.

Put Bonuses and Windfalls to Work

Not all income arrives through your regular paycheque.

Bonuses, tax refunds, commissions, gifts, and other windfalls can provide opportunities to make larger contributions without changing your monthly budget.

You don't necessarily have to direct every dollar toward savings.

Instead, you could establish a personal rule — for example, directing a certain portion of unexpected income toward a financial goal while using the rest for spending or other priorities.

The important part is having a plan before the money arrives.

That makes it less likely that an unexpected payment simply disappears into everyday expenses.

Let Career Progression Increase Your Savings Rate

Your savings rate can evolve throughout your career.

Early in your working life, you may have limited income and significant expenses. Later, promotions, experience, and career changes may increase your earning capacity.

That creates an opportunity to gradually increase the amount you're putting toward long-term goals.

You might start by making consistent contributions that fit your current budget. As your income grows, increase those contributions rather than allowing your spending to absorb every increase.

Over a long career, this approach can turn rising income into rising financial capacity.

Redirect Debt Payments Once the Debt Is Gone

Paying off debt can create another opportunity.

If you've been making a $500 monthly debt payment and eventually eliminate that debt, your cash flow has effectively increased by $500 per month.

Rather than automatically redirecting the entire amount toward new spending, consider redirecting some or all of it toward savings or investments.

You were already accustomed to living without that money.

Redirecting the payment can therefore increase your savings rate without requiring the same adjustment as cutting $500 from an established lifestyle.

The appropriate approach depends on the type of debt, its interest rate, and your broader financial situation.

Automate Your Contributions

Good financial habits don't always require constant willpower.

Automation can make increasing your savings rate easier because the money is directed toward your goals before you have an opportunity to spend it elsewhere.

You could set up automatic contributions to appropriate savings or investment accounts and increase them periodically as your income changes.

For example, you might review your contribution percentage whenever you receive a raise or once a year during a broader financial check-in.

The less often you have to make the decision manually, the easier it can be to turn saving into a routine.

What Should Count Toward Your Savings Rate?

There isn't one universally applicable definition of a savings rate.

Depending on your goals and the method you're using, you might include things such as:

• Contributions to a workplace retirement plan
• Contributions to an RRSP
• TFSA contributions
• Other investment contributions
• Contributions to an emergency fund
• Money set aside for a major long-term purchase

The key is consistency.

If you're tracking your savings rate over time, use the same definition from one period to the next. That gives you a clearer picture of whether you're actually making progress.

Focus on Progress, Not a Perfect Percentage

It can be tempting to search for the “right” savings rate.

But a percentage that works for one Canadian household may be completely unrealistic for another.

Income, housing costs, family responsibilities, debt, age, financial goals, and other circumstances all affect how much someone can reasonably save.

Instead of comparing your savings rate with someone else's, consider whether you're moving in the direction you want.

If you're currently saving 8%, could you eventually reach 10%?

If you're already saving 15%, could your next raise allow you to move toward 17%?

The answer doesn't need to be the same for everyone.

The Bottom Line

Building wealth doesn't necessarily require an extreme change to your lifestyle.

For many people, a more sustainable strategy is to gradually increase the percentage of income directed toward long-term goals.

Use raises as an opportunity to increase contributions. Put part of your bonuses toward financial goals. Redirect former debt payments when they become available. Automate contributions so saving becomes part of your financial routine.

Most importantly, revisit your savings rate as your circumstances change.

The goal isn't simply to save more today.

It's to build a financial system in which your capacity to save grows alongside your income, allowing each stage of your career to contribute more toward the financial future you're working to create.