How Much Should You Save From Each Paycheck? (Canada 2026)
The definitive guide to paycheck savings for Canadians. Learn the 50/30/20 rule, age-based guidelines, TFSA/RRSP contribution targets, emergency fund goals, and use our free calculator.
Quick Answer
Save 20% of your after-tax income. For a $4,000/month take-home pay, that's $800/month ($9,600/year). Priority: emergency fund first ($1,000-$2,000), then TFSA/RRSP. If you get paid biweekly, you get 26 paycheques per year—budget for 24 and save the extra two.
Loading chart...
Example: $4,000/month income split using the 50/30/20 rule
Paycheck Savings Calculator
Calculate how much you should save from each paycheck
If you've ever wondered "How much should I save from each paycheck?"—you're not alone. It's one of the most common financial questions Canadians ask, and there's no single answer that works for everyone.
But here's the good news: there are clear guidelines based on your age, income, and goals. This guide breaks down exactly how much you should save, where that money should go, and how to make it happen even if you're living paycheck to paycheck.
The Simple Answer: The 20% Rule
The most common rule of thumb is to save 20% of your after-tax income. This is the "savings" portion of the popular 50/30/20 budgeting rule.
20% Savings Rule Examples
Important: Use your after-tax income, not your gross salary. If you make $60,000/year, your take-home is roughly $4,000-$4,400/month depending on your province—so you'd save $800-$880/month.
Savings by Age: How Much Should You Save?
The 20% rule is a good baseline, but your ideal savings rate changes with age and life stage:
Loading chart...
| Age Range | Recommended Savings Rate | Why |
|---|---|---|
| 20-29 | 10-15% | Lower income, student loans, building career. Focus on emergency fund first. |
| 30-39 | 15-25% | Higher income, possibly buying home, kids. Ramp up TFSA/RRSP contributions. |
| 40-49 | 20-30% | Peak earning years, retirement looming. Max TFSA/RRSP if possible. |
| 50-65 | 30%+ | Catch-up mode if behind. Kids likely out of house, mortgage nearly paid. |
Don't Panic If You're Behind
If you're 35 and saving 5%, don't give up—start where you are and increase by 1-2% each year. Saving something is infinitely better than saving nothing. Start today.
Where Should Your Savings Go?
Knowing how much to save is only half the battle. The other half is knowing where to put that money. Here's the priority order for Canadians:
Priority 1: Emergency Fund ($1,000-$2,000)
Before anything else, save $1,000-$2,000 in a high-interest savings account (HISA). This is your "I need money NOW" fund for car repairs, medical emergencies, or unexpected job loss.
Quick Win: Build Your First $1,000
If you save $200/month, you'll have $1,000 in 5 months. If you save $100/month, you'll have it in 10 months. Set up an automatic transfer on payday and forget about it.
Once you hit $1,000, move to Priority 2. Don't overthink this—just start.
Priority 2: Employer RRSP Match (If Available)
If your employer offers an RRSP match (e.g., they match 50% of your contributions up to 5% of salary), take it. This is free money—an instant 50% return on your investment.
Example: You make $60,000/year. Your employer matches 50% up to 5% of salary. If you contribute $3,000/year (5%), they add $1,500. That's $1,500 for free.
Priority 3: Full Emergency Fund (3-6 Months)
Now build your emergency fund to 3-6 months of expenses. If your monthly expenses are $3,000, aim for $9,000-$18,000. Keep this in a HISA (not TFSA) for instant access.
Emergency Fund Targets by Job Security
Priority 4: TFSA Contributions
After your emergency fund is solid, max out your TFSA. The 2026 contribution limit is $7,000/year ($583/month). All growth is tax-free forever, and you can withdraw anytime without penalties.
Why TFSA first? It's more flexible than RRSP. You can use it for retirement, down payment, sabbatical, or any goal. For most Canadians under 40, TFSA beats RRSP.
Priority 5: RRSP Contributions
After maxing TFSA, contribute to RRSP. The 2026 contribution limit is 18% of your previous year's income, up to $32,490. RRSP contributions reduce your taxable income, giving you a tax refund.
RRSP vs TFSA: Quick Decision Guide
Choose TFSA if:
You make under $100,000/year, need flexibility, or are under 35
Choose RRSP if:
You make over $100,000/year, get employer match, or are age 40+
Ideal strategy:
Max TFSA first ($7,000/year), then contribute to RRSP. Both are powerful.
Biweekly vs Monthly Paycheques: The 26 vs 24 Trick
Many Canadians get paid biweekly (every two weeks), which means you get 26 paycheques per year, not 24. This creates two "extra" paycheques that don't align with your monthly budget.
The smart strategy: Budget as if you get 24 paycheques (two per month), and use the two extra paycheques for savings goals, debt payoff, or annual expenses like car insurance.
Loading calendar...
Example: $2,000 Biweekly Paycheque
Annual income: $2,000 × 26 = $52,000
Monthly equivalent: $52,000 ÷ 12 = $4,333/month
Budget for: $2,000 × 2 = $4,000/month
Two extra paycheques per year = $4,000 bonus for savings/debt!
Can't Save 20%? Start Smaller
If 20% feels impossible, don't give up. Start with what you can and increase over time. Here's how:
Start with 5%
Even 5% ($200/month on $4,000 income) builds the saving habit. It's $2,400/year—way better than $0.
Increase by 1% every 3 months
Start at 5%, move to 6% after 3 months, 7% after 6 months, etc. In 2 years you'll be at 13% without feeling the pinch.
Save raises and bonuses
Got a $2,000 raise? Add $1,000 to savings, keep $1,000 for lifestyle. Tax refund? 50% to savings, 50% for fun.
Automate it
Set up automatic transfers on payday. If you never see the money, you won't miss it.
Common Savings Mistakes to Avoid
Mistake 1: Saving "What's Left"
If you wait until the end of the month, there's never anything left. Pay yourself first—set up automatic transfers on payday.
Mistake 2: No Emergency Fund
Skipping the emergency fund and going straight to TFSA/RRSP is risky. Build $1,000-$2,000 first or you'll raid your investments when emergencies hit.
Mistake 3: Ignoring High-Interest Debt
If you have credit card debt at 20% interest, pay that off before maxing TFSA. The guaranteed 20% return from eliminating debt beats any investment.
Mistake 4: Using Gross Income for Planning
Always use take-home pay, not gross salary. If you make $60,000/year, your take-home is ~$4,200/month (not $5,000). Budget with reality.
Real Examples: Canadians at Different Income Levels
Loading comparison...
Example 1: Entry-Level Worker ($40,000/year)
Savings Strategy:
- • Build $1,000 emergency fund first (takes ~2 months)
- • Then $300/month to TFSA, $260/month to emergency fund
- • After 6 months of full emergency fund, max TFSA ($583/month)
Example 2: Mid-Career Professional ($70,000/year)
Savings Strategy:
- • Already has emergency fund (prioritized in 20s)
- • Max TFSA: $583/month
- • RRSP: $357/month (gets employer match)
- • Annual savings: $11,280 + tax refund from RRSP
Example 3: High Earner ($120,000/year)
Savings Strategy:
- • Max TFSA: $583/month
- • Max RRSP contributions for tax savings: $1,500/month
- • Extra to non-registered investment account: $167-$667/month
- • Higher savings rate due to high tax bracket (RRSP more valuable)
Frequently Asked Questions
How much of my paycheck should I save in Canada?
The general rule is to save 20% of your after-tax income. For a $4,000/month take-home pay, that's $800/month or $9,600/year. However, this varies by age, income, and financial goals. In your 20s, aim for 10-15%; in your 30s, 15-25%; in your 40s and 50s, 20-30% or more if catching up.
What is the 50/30/20 rule for saving money in Canada?
The 50/30/20 rule divides your after-tax income into three categories: 50% for needs (rent, groceries, utilities), 30% for wants (dining out, entertainment), and 20% for savings (emergency fund, TFSA, RRSP, debt payoff). It's a simple guideline that works well for most Canadians, though you may need to adjust in high-cost cities like Toronto or Vancouver.
How much should I save per month in Canada?
Aim to save at least 20% of your after-tax income per month. For example: $3,000/month income = $600 savings, $5,000/month income = $1,000 savings, $7,000/month income = $1,400 savings. Priority order: 1) Build $1,000-$2,000 emergency fund, 2) Get employer RRSP match (if available), 3) Build 3-6 months emergency fund, 4) Max TFSA ($7,000/year in 2026), 5) Contribute to RRSP.
How do I calculate savings from biweekly paycheques in Canada?
If you're paid biweekly, you get 26 paycheques per year (not 24). To calculate monthly savings: (Biweekly paycheck × 26) ÷ 12 = Monthly income, then multiply by your savings rate (usually 20%). For example, $2,000 biweekly = ($2,000 × 26) ÷ 12 = $4,333/month. At 20% savings rate, save $867/month.
Should I save in TFSA or RRSP first in Canada?
For most Canadians, prioritize TFSA first unless: 1) Your employer matches RRSP contributions (always get the match first - it's free money), 2) You're in a high tax bracket (over $100,000/year income makes RRSP more valuable). TFSA is more flexible, has no tax on withdrawals, and is better for most people under 30. After maxing TFSA ($7,000/year in 2026), then contribute to RRSP.
Ready to Start Saving Smart?
Waypoint Budget helps you track your savings automatically, set goals, and build wealth. Free forever for Canadians—no credit card required.
Free forever • Track TFSA/RRSP • Automatic categorization • Built for Canadians
Keep Reading
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Savings recommendations are general guidelines and may not be appropriate for your specific situation. Individual circumstances, income levels, debt obligations, and financial goals vary. Tax rules and contribution limits are subject to change. Always consult with a qualified financial advisor before making significant financial decisions. Past performance does not guarantee future results.