How Much Should I Save Each Month Canada? (2026 Guide)
Learn how much you should save each month in Canada based on your age, income, and financial goals. Includes age-based recommendations, calculators, and Canadian-specific advice.
Quick Answer
Save 20% of your after-tax income each month. This means if you take home $4,000/month, save $800/month. If that feels too aggressive, start with 10% ($400/month) and increase gradually. The key is to start saving something—even 5% is better than nothing.
One of the most common questions Canadians ask is: "How much should I save each month?"
The answer isn't one-size-fits-all. It depends on your age, income, financial goals, and current expenses. But there are proven guidelines that work for most people.
The 20% Rule: The Starting Point
Most financial experts recommend saving 20% of your after-tax income each month. This is part of the popular 50/30/20 budgeting rule:
50% - Needs
Essential expenses: rent/mortgage, groceries, utilities, insurance, minimum debt payments, transportation to work.
30% - Wants
Non-essential expenses: dining out, entertainment, hobbies, shopping, subscriptions, vacations.
20% - Savings
Money for the future: emergency fund, retirement savings (RRSP/TFSA), investments, extra debt payments, financial goals.
Example: If you take home $4,000/month after taxes, you should save $800/month (20%).
Age-Based Savings Recommendations
Your savings rate should change as you age. Here's what to aim for at different life stages:
In Your 20s: 10-15%
You're likely earning less and have student debt. Focus on building an emergency fund first, then start contributing to your TFSA. Even saving 10% is excellent at this age.
Example:
Take home $3,000/month → Save $300-$450/month
In Your 30s: 15-20%
Your income is likely higher, and you should have your emergency fund built. Focus on maxing out your TFSA, contributing to RRSP, and saving for major goals (house down payment, kids' education).
Example:
Take home $5,000/month → Save $750-$1,000/month
In Your 40s+: 20-25%
You're in your peak earning years. Maximize retirement savings, pay down debt aggressively, and build wealth. If you started late, you may need to save 25%+ to catch up.
Example:
Take home $6,000/month → Save $1,200-$1,500/month
What to Save For: Priority Order
Not all savings are equal. Here's the order you should prioritize:
Emergency Fund (3-6 months expenses)
Before anything else, build an emergency fund. Aim for $5,000-$15,000 (or 3-6 months of expenses). Keep this in a high-interest savings account (HISA) for easy access. This protects you from unexpected expenses without going into debt.
High-Interest Debt (Credit cards, loans)
If you have credit card debt (typically 19-24% interest), prioritize paying this off before saving. The interest you pay is higher than any return you'll get from savings. Once debt-free, redirect those payments to savings.
TFSA Contributions
Once your emergency fund is built, max out your TFSA. The 2026 limit is $7,000. This grows tax-free and can be withdrawn anytime without penalty. Perfect for short-term goals (house down payment) or long-term wealth building.
RRSP Contributions (if in higher tax bracket)
If you're in a higher tax bracket (marginal rate 30%+), contribute to your RRSP to reduce taxes. You'll get a tax refund that you can reinvest. The 2026 contribution limit is 18% of your previous year's income, up to $32,490.
Specific Goals (House, vacation, car, etc.)
After your emergency fund and retirement savings are on track, save for specific goals. Use a separate savings account or TFSA for each goal to track progress.
Real Examples for Canadian Incomes
Example 1: $50,000/year (Take home ~$3,750/month)
Breakdown:
• Emergency fund: $200/month (until $5,000 reached)
• TFSA: $300/month (maxes out $7,000 limit in ~23 months)
• Goals: $250/month (house, vacation, etc.)
Example 2: $75,000/year (Take home ~$5,200/month)
Breakdown:
• Emergency fund: $300/month (until $10,000 reached)
• TFSA: $583/month (maxes out $7,000 limit in 12 months)
• RRSP: $500/month (reduces taxes, builds retirement)
• Goals: $157/month
Example 3: $100,000/year (Take home ~$6,800/month)
Breakdown:
• Emergency fund: $500/month (until $15,000 reached)
• TFSA: $583/month (maxes out $7,000 limit in 12 months)
• RRSP: $1,000/month (significant tax savings, retirement)
• Goals: $277/month
What If 20% Feels Too Aggressive?
If you live in Toronto, Vancouver, or another high-cost city, saving 20% might feel impossible. That's okay. Start with what you can afford.
Start Small, Build the Habit
Even saving 5% is better than nothing. The key is to:
- Start with 5-10% if 20% feels too aggressive
- Automate your savings (set up automatic transfers)
- Increase by 1% every 3-6 months
- Save any raises or bonuses instead of increasing spending
Example progression:
- Month 1-3: Save 5% ($200/month on $4,000 income)
- Month 4-6: Increase to 7% ($280/month)
- Month 7-9: Increase to 10% ($400/month)
- Month 10-12: Increase to 15% ($600/month)
- Year 2: Aim for 20% ($800/month)
Canadian-Specific Savings Considerations
1. Tax-Advantaged Accounts
In Canada, you have two powerful savings tools:
TFSA (Tax-Free Savings Account)
2026 limit: $7,000/year
Best for: Short-term goals, emergency fund, or long-term wealth building
Why: All growth is tax-free, withdrawals are tax-free, and you can withdraw anytime without penalty.
RRSP (Registered Retirement Savings Plan)
2026 limit: 18% of income, up to $32,490
Best for: Retirement savings, tax reduction
Why: Contributions reduce your taxable income, giving you a tax refund. You pay tax when you withdraw in retirement (usually at a lower rate).
2. High-Interest Savings Accounts (HISA)
For your emergency fund, use a high-interest savings account (HISA). These typically offer 4-6% interest (as of 2026), much better than regular savings accounts (0.5-1%).
Popular Canadian HISAs include:
- EQ Bank: 4-5% interest, no fees
- Tangerine: Promotional rates up to 6%
- Simplii Financial: Competitive rates, no fees
- Wealthsimple Cash: 4-5% interest, easy access
Common Mistakes to Avoid
Mistake 1: Saving Before Paying High-Interest Debt
If you have credit card debt at 20% interest, pay that off first. The interest you pay is higher than any return you'll get from savings. Exception: Still build a small emergency fund ($1,000-$2,000) to avoid more debt.
Mistake 2: Not Automating Savings
If you try to save "what's left" at the end of the month, you'll save nothing. Set up automatic transfers on payday. Pay yourself first, then spend what's left.
Mistake 3: Keeping Emergency Fund in Chequing Account
Your emergency fund should be in a high-interest savings account (HISA), not your chequing account. You'll earn 4-6% interest instead of 0%. Keep it separate so you're not tempted to spend it.
Mistake 4: Not Increasing Savings with Income
When you get a raise, don't increase your spending. Save the difference. If you get a $200/month raise, save $150 and increase spending by only $50. This is how you build wealth over time.
Frequently Asked Questions
How much should I save each month in Canada?
Most financial experts recommend saving 20% of your after-tax income each month. However, this varies by age: people in their 20s should aim for 10-15%, those in their 30s should target 15-20%, and those in their 40s+ should aim for 20-25%. Start with what you can afford and increase gradually.
What percentage of income should I save in Canada?
The general rule is to save 20% of your after-tax income. This is often called the 50/30/20 rule: 50% for needs, 30% for wants, and 20% for savings. However, if you're just starting out, even saving 5-10% is better than nothing. The key is to start and increase over time.
How much should I have in my emergency fund in Canada?
Financial experts recommend having 3-6 months of expenses in your emergency fund. For most Canadians, this means $5,000-$15,000. If you have a stable job, 3 months is sufficient. If you're self-employed or have irregular income, aim for 6 months. Keep this in a high-interest savings account (HISA) for easy access.
How much should I save for retirement in Canada?
Aim to save 10-15% of your pre-tax income for retirement, including employer contributions. For example, if you make $60,000/year, save $6,000-$9,000 annually ($500-$750/month). Use your TFSA and RRSP to maximize tax benefits. The earlier you start, the less you need to save monthly due to compound interest.
Is saving 20% of income realistic in Canada?
For many Canadians, especially those in high-cost cities like Toronto or Vancouver, saving 20% can be challenging. Start with what you can afford—even 5% is better than nothing. Focus on building the habit first, then gradually increase your savings rate as your income grows or expenses decrease.
How much should I save if I make $50,000 a year in Canada?
If you make $50,000/year (approximately $3,750/month after tax), aim to save $375-$750/month (10-20%). Prioritize: 1) Emergency fund ($5,000-$10,000), 2) TFSA contributions, 3) RRSP if you're in a higher tax bracket. Start with $200/month if 20% feels too aggressive, then increase gradually.
How to Actually Save More
Knowing how much to save is one thing. Actually doing it is another. Here are proven strategies:
Automate Everything
Set up automatic transfers on payday. Transfer money to your savings account before you even see it. Out of sight, out of mind.
Use the 24-Hour Rule
Before making any non-essential purchase over $50, wait 24 hours. You'll be surprised how many things you decide you don't actually need.
Save Raises and Bonuses
When you get a raise or bonus, save 50-75% of it. You're used to living on your old income, so you won't miss it.
Track Your Spending
Use a budgeting app (like Waypoint Budget) to see where your money actually goes. You'll find areas to cut back without feeling deprived.
Make It Hard to Spend
Keep your savings in a separate account, preferably at a different bank. The extra step to transfer money makes you think twice before spending it.
Track Your Savings with Waypoint Budget
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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. Always consult with a qualified financial advisor before making significant financial decisions. Individual circumstances, goals, and risk tolerance vary.