I made a financial planning spreadsheet a while back. Then, I realized that the money I'm saving has specific allocations.

This much goes to the future car payment. This much goes to the new PC I'm building. This much goes to something else I'll be buying in the future.

Should I count the money I'm putting into my future car purchase as "saving"? Should I count the money I'm putting into a house downpayment as "saving"?

Or does saving only count for the money I actually save that I don't plan on spending?

This looks like quite a subjective question. But, basically the question is, when does saving count?

This is particularly important for me so that I would know if I need to save more than what I actually am saving currently.

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    I would encourage you to look at this answer of mine and the blog post that I have linked to. That answers the question of how much you should save and why.
    – Jay
    Commented Jan 5, 2015 at 4:28
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    Why should one save money? it can have zero value in bad times. Why not invest in gold, silver or real estate? Commented Jan 5, 2015 at 15:42
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    @IbrahimApachi Cash isn't a good investment, but neither are gold and silver (and real estate is questionable). Pieces of companies (stocks) tend to be much more valuable over time. Commented Jan 5, 2015 at 19:41
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    Read the 'Richest Man In Babylon' to understand the philosophy of saving.
    – Chloe
    Commented Jan 5, 2015 at 23:37
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    The typical rule of thumb for saving is money you are saving towards wealth, investments, retirement, and financial independence. Savings goals for other financial goals (e.g. buying a car), are separate and apart from this 10% guidance. You might consider budgeting into three main buckets, essentials (50%), lifestyle (20-30%), and financial (30-20%) - YMMV Commented Jan 6, 2015 at 2:49

10 Answers 10


It doesn't really make sense to worry about the details of "what counts as saving" unless you also move beyond a simplistic rule of thumb like "save 10% of your income".

That said, most of the sources I see pushing rules of thumb like that are talking about saving for retirement. That is, you need to sock that money away so you will be able to spend it after you retire. (This CNN page is one example.) On that theory, it only "counts" if you put it away and don't touch it until you retire, so things like car and computer funds would not count as saving.

Another thing you'll see some people say (e.g., this Nerdwallet article) is to use 20% of your income for "financial priorities". This would include retirement saving, but also things like paying off debt and saving for a down payment on a house.

Saving for a small purchase in the near future would not usually be considered "saving" at all, since you're not going to keep the money. If you put $5 in your wallet tonight so you can buy a hamburger for lunch tomorrow, you wouldn't call that saving; likewise setting aside a few hundred dollars for a new computer wouldn't "count" as saving under most definitions. (Some people might "count" saving for something like a house, since that is a long-term plan and the house, unlike a computer, may rise in value after you buy it. But you wouldn't want to fully count the house as part of your retirement savings unless you're willing to sell it and live off the proceeds.)

However, none of these rules will help that much if your goal is, as you say at the end of your question, to "know if I need to save more than what I actually am saving currently". Saving 10% of your income won't magically ensure that you're saving "enough". To assess whether you personally are saving "enough", you need to actually start running some numbers on how much money you personally will need in retirement. This will depend on any number of factors, including where you live, what sources of retirement income you might have besides savings (e.g., pensions), etc. In short, to know if you're saving enough, you can't listen to the generic stuff that "everyone says"; you need to consider your own situation in a deliberate, focused way.

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    "paying off debt" seems like a slippery slope. If the debt is credit card debt incurred from frivolous things, then you're actually spending the money on those frivolous things.
    – Random832
    Commented Jan 5, 2015 at 14:48
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    @Random832 Once it is debt, clearing that debt is not "spending money on the friolous thing". The money was spent already. Paying off the debt is clearing it off your balance sheet, regardless of where it came from. Barring limited liability & security & tax effects, paying off your house debt or your consumer debt or car debt or investment loans is paying off debt. going into debt for frivolous things was the problem, not paying it off.
    – Yakk
    Commented Jan 5, 2015 at 15:28
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    @Random832: just make sure you account your credit card spending as spending and that you only consider net debt reduction as "paying off debt", not all money paid to creditors. Then you won't fall into the error of thinking that a budget in which you spend 80% on serious things and 20% on frivolous things, could be improved by switching to one in which you spend 80% on serious things and 20% paying down last month's credit card debt, while running up a new debt of 20% of your monthly income during the month! Commented Jan 5, 2015 at 17:53
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    I'd quibble that paying off the mortgage on your house is a reasonable form of saving. If you buy a house and get the mortgage paid off by the time you retire, then you will have very little housing expense. (You'll still have to pay property taxes and insurance.) If you don't do this, than when you retire you will be paying rent. If your rent is, say, $1000 a month, then eliminating that expense is just as good as having an additional $1000 per month in retirement income. One can debate the relative value of "investing" in paying off a mortgage versus investing in a retirement fund, but ...
    – Jay
    Commented Jan 5, 2015 at 20:58
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    For the sake of completeness, worth lauding "saving to buy something," since it's a financial habit that prevents credit card debt. That is, it is as good financial advice and sense as "save 10% of your money," regardless of whether the 10% truism includes it.
    – djechlin
    Commented Jan 6, 2015 at 2:06

It's pretty simple. The 10% is any savings for retirement. Preferably, it's in a retirement account, but that's not mandatory.

It's great that you save for a vacation, computer, house deposit,etc, but that's not what these articles are referencing.

Edit (in response to the running comments on @BrenBarn's answer)

The mortgage issue is worth further discussion. I'm saving toward a home purchase, it may be $50K saved. But that's not money for retirement, the house savings never is. I get the $200K mortgage, my balance sheet is net neutral (less fees, closing costs, of course) but my retirement savings again is unchanged. I put $10K toward principal, the balance sheet again is $10K better, but retirement account, unchanged. Last, I pay off the mortgage. Retirement account unchanged. But, my retirement budget requirement is $1000/mo less (The mortgage payment), and my 'number' drops by $300K or so. (This is based on the 4% rule. To withdraw $1000/mo requires $300K in retirement assets.)

It may seem pedantic, but there's an important distinction to be made here. It's easy to distinguish retirement savings from all other wise financial transactions. Paying debt off is wise but not retirement savings. Any actions that reduce your ongoing expenses? Clearly, wise. And it reduces the number needed to cover your retirement budget, but it's distinct from 'retirement savings.'

For those that enjoy the intellectual exercise of insisting there's always a grey area, I'll give it to you. The family with 3 kids, in the $1.2M 5 bedroom house. The parents know they will move into their paid off summer house upon retiring, and sell this family house. In his wisdom, hubby has planned for the mortgage to be paid in full well ahead of retirement, and for purposes of planning, only view the house as worth $900K. The house does have a relationship to the retirement savings. But the action of planning for Alice's retirement (the maid they will no longer need once they move) is not savings, but rather, an adjustment down in their retirement budget.

I think you'll find most conflicts regarding this issue resolved by understanding this distinction.


In addition to the issues discussed in BrenBarn's answer, I think you need to consider your medium term saving needs and existing savings. In particular, do you have a sufficient rainy day fund, a fund you will spend if things go wrong?

For example, if you are dependent on a vehicle that is not covered by a guarantee or service plan, you should have enough money saved for a couple of major repairs. Depending on how secure your job is, whether it carries sick leave and long term disability, and how easy or difficult it would be to find another job in the event e.g. of your employer going bankrupt due to a downturn in your industry, you should have months to years of minimal living expenses in your rainy day fund.

If you don't have those things covered, you should urgently save as much as you can until they are covered. If you do, then the next savings priority is to put money by for retirement.

Of course, if all goes well the rainy day fund will ultimately get folded into retirement, but it needs to exist now, in a form you can access quickly.


Your long-term saving targets will include retirement, kids' college, house, etc. Medium-term might be your college, or a car. Short-term might be a vacation somewhere or a new laptop.

In all cases saving, then spending money you do have is better than spending money you don't have.

I think that's the first takeaway of this truism.

However, I also believe 10% is said as a retirement target. Retirement is very important and this advice is stressed by many financial planners because it's very easy to underestimate how expensive it is.

By the same token, it's recommended that you spend 2 months' salary on an engagement ring, and that particular truism can be traced back to a DeBeers ad. I personally don't know whether 10% as a retirement target is sage - it sounds right but I haven't followed it for a variety of reasons. Please corroborate against multiple sources and apply to your own financial person.


The reason for the 10% rule of thumb is that this is roughly what you'll need to save for retirement in order to have the same standard of living in retirement as you do during your working years.

Since each additional dollar produces less happiness you will maximize your happiness by equalizing your income over your entire life and thus this produces the maximum happiness.


Don't mind the percentages. They are highly misleading.

First, "saving" is making available for future use. It might be "hoarding", "investing" or a combination thereof. It might be for a specific use (a car, a college education, retirement, etc.), or for a non-specific use (for an emergency, for when you decide to spend some of those savings, or just for lack of a compelling use as of the moment).

In first case, whatever you save should be available by the date you intend to use it. In second case, it might be prudent to have savings (and investments, see below) of various liquidity (cash you have at hand, bank account you can draw next day, mutual fund account you can draw in a month, maybe something you can only cash in a year etc.).

You will see that the actual percentages you "save" fluctuate enormously throughout your life, varying with the progress of your career, changes of marital status and family cmposition, etc., etc.

What you should really do is to come up with a rough plan of how you expect, from right now and to the end of your life at whatever age, have enough money for whatever level of comfort you plan for each period of your life, allowing for some specified level of perturbations.

Then you just execute that plan or change it as you go.


This is an excellent question. I think of "saving" as "deferred spending".

Then, I realized that the money I'm saving has specific allocations.

This follows the Every Dollar Has A Purpose (EDHAP) philosophy.

This much goes to the future car payment. This much goes to the new PC I'm building. This much goes to something else I'll be buying in the future.

Yup. You're "spending" it now, every month, by moving a certain amount to your "future car payment fund". your "new PC fund", the "vacation fund", the "house down payment fund", etc.

Should I count the money I'm putting into my future car purchase as "saving"? Should I count the money I'm putting into a house downpayment as "saving"?

Yes. You aren't deferring this spending for retirement, but you certainly are deferring the spending until some time in the future.

Note that this definition of spending is pretty broad: moving money from Bank Account #1 to Bank Account #2 and some time in the (near, medium or far) future moving the money from Bank Account #2 to the vendor you buy the car, the PC, the house, the vacation from.

Or does saving only count for the money I actually save that I don't plan on spending?

You're eventually going to spend all your money (even if the executor of your Will is doing the "spending" by giving it to your children.).

  • I think this rather misses the point of the "save 10%" advice. If "saving" is just waiting a bit before you spend it all, then you will have nothing left in the long term. The advice is about saving for your retirement.
    – Simon B
    Commented Jul 24, 2019 at 21:18
  • @SimonB OP did not mention retirement. He gave a whole lot of examples of what he's saving for, and then asked, "when does saving count?" Well, it always counts, but it's not always for the same goal/purpose, and not always the same time frame. EDHAP, and one of the Purposes of saving is for retirement.
    – RonJohn
    Commented Jul 24, 2019 at 21:25

It's a subjective question. Personally, I count it as "Savings" if I'm intending to use it for the future financial security of my family. Whether or not that "future" is retirement is irrelevant.

Ask yourself, "Is that money intended to prevent me from becoming homeless/starving during leaner years?" If "yes", I consider it savings.

By that definition, if I'm putting aside money for a new car, I don't consider that "savings". It's probably more accurate to call it "delayed spending" than "saving".

If I'm putting aside money to put into a rental property, I DO consider that savings.

Also, it's a bit controversial, but if I'm paying down the principal on my home, I DO consider that saving. Because, once it's paid off, it reduces my expenses during retirement.

Putting aside money for college is iffy by my definition. You have to be honest with yourself. Is the student going to take a major that's likely to pay off?

Paying off debt IS considered savings.


The only time I've ever heard 10% is that you should set aside 1/10 of your income for some purpose that actively makes you money (investing, starting a business, loaning out, etc). It's the principle bit of advice in the book "The Richest Man In Babylon." For more general savings, eg, saving for a car, new house, emergencies, etc, there's not a hard rule I've ever heard because everyone's situation is different. The best advice I've ever been given is to approach it from the opposite end: instead of saving a specific amount, eg, 20%, and then spending the rest, create a hard budget for what you can spend (300 for rent, 200 for bills, 50 a week for whatever I want to buy, etc), then save the rest. This way you get your spending down to the important things rather than just wasting anything over a certain amount that you've allocated for savings. If you need to save a certain amount each time you get payed (saving up for something specific), then just factor that in with things like rent, bills, etc, when making your budget and then add anything extra to general savings.


This questions is rational but ,in my view, definition of savings will be like this : "Savings is that amount of money which will be useful in unexpected future cash demanding events or they will stay ideal through out your life"

Human can purchase/pursue any luxury items at any point of time in their life but there will come several unavoidable events which will take away your savings and (some how) you will not have any control over it.

Example: You found out you have a cancer at the age of 45. Doctor says you can under go several treatments and will be fine again. For this you will have to spend $1m. Now this can be considered as unavoidable expense and only your savings will be helpful to you in this kind of situations.

So Savings is nothing but a money kept at a safe location which will be used in such unavoidable situations or they will stay ideal during your entire life time and your next generation will be able to use them after your death.

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