If you asked me five years ago if I ever thought I would be able to live off of 50% of my income, I would’ve laughed at you. My life was so different back then.
I’m going to share how my husband and I are able to live off half of our income and save half of our income. I’ll also give actionable tips on how to increase your savings rate.
Lifestyle Creep
I’m told all the time, “If I made as much money as you, of course I’d be able to save half my income.”
I hear you.
I thought the same thing, but it was another excuse justifying my paycheck to paycheck lifestyle.
The more money you make, the easier it is to spend money. Not necessarily out shopping or swiping your card– but with the upgraded car, bigger house, and fancier vacations.
How many people do you know that once they get a raise have already spent that money?
“I’m going to trade in my car and finally get the one I deserve.” Ladies and gentlemen, that’s lifestyle creep.
Just because our income has increased over the years doesn’t mean that it was easy for us not to fall into lifestyle inflation.
Our savings rate is now at 50%. We are working hard to bring that number up as we are working towards purchasing our first rental property.
FI/RE
FI/RE stands for Financial Independence, Retire Early. The goal is to save 50-75% of your income, so you can retire early– typically in your 30’s or 40’s.
There is an incredible community surrounding FI/RE that motivates and encourages individuals to change their view on finances and save large amounts of money so retiring early is a possibility.
What if I don’t want to retire early? Great question! Just because you are pursuing FI/RE doesn’t mean that you have to quit your 9-5 job; but it gives you the option if that’s what you want.
People that have reached FI/RE are now able to pursue passion projects that they’ve dreamt about for years. FI/RE gives them the freedom to do just that.
For more information on the FI/RE Movement check out my video where I compared The Dave Ramsey Baby Steps to the FIRE Movement.
Get On A WRITTEN Budget
If you want to have big savings goals, you need to know where your savings are going.
It doesn’t have to be complex– a simple zero based budget.
Click here to check out the exact budget that I use and have perfected over the years, available in Excel and Google Sheets.
The advantage of a written budget is that it helps you track where you are over spending, where you can cut back and maybe even where you can spend more!
Yes, you heard that right… spend more.
Budgets give you freedom. I often get eye rolls as a response to that statement, but let me break it down and show you how your budget can give you financial autonomy.
My husband is the spender in our relationship and a big clothing enthusiast. His button downs caught my eye when we first met.
He loves buying clothes and it was difficult for us to compromise when we first combined our income. We decided to put $50 a month each in a clothing budget to buy whatever we wanted without guilt.
This is a prime example of how our budget gives us freedom and permission to spend!
Start Meal Prepping
If you stop for coffee and a bagel each morning on your way to work and then proceed to go out to eat with your coworkers, you can blow through $10,000 in a year.
The simple act of meal prepping is not only healthier, but saves you serious cash.
Just think of what you could do with $10,000.
Shop Around For Monthly Bills
Companies like BillShark and Gabi help to lower our monthly expenses.
Shopping around is a task that we put off, but by making it a habit every 6 months, you can save a ridiculous amount of money.
Here are two sites that I personally recommend and do all of the hard work for you.
BillShark: Negotiates lower prices on your monthly bills to save you time, money and hassle
Gabi: An online advisor who compares insurance options and finds the right policy in two minutes.
Stop Buying Things Because They Are On Sale
Raise your hand if you’ve gone into a store that was having a sale and you felt that you had to purchase an item or you’d be missing out.
We often buy more just because it’s on sale — even if we don’t need it.
I recently had a friend that went to a store closing sale. She was excited because she stocked up on items that were 50% off.
She bought organic coffee for $9. The typical purchase price was $18. Sounds like a great deal right? Yes, but not when her usual coffee is $6. She didn’t save $9, she overspent by $3.
Retailers markup their items and then put everything on sale. You look at the bottom of the receipt and in big, exciting letters you see “TOTAL SAVED: $326.53”
I’m sorry to say that you didn’t save $326.53. Please don’t fall for these marketing tricks.
We Are DINKS (Dual Income, No Kids)
According to USA Today, the average total cost to raise a child excluding college is $233,610, that equals out to about $12,978 per year. There is so much that goes into raising a child, we have to take into consideration the cost of food, daycare or the cost of being a SAHM. It’s okay to NOT have kids as well as it is okay to have kids. You have to weigh your options and more people should consider their income and/or cost when thinking of starting a family.
I’m not saying that you can’t save 50% of your income if you have a family. I will say that we are taking advantage of this time in our lives where we don’t have kids yet.
Use A Wish List
Please tell me I’m not the only one who hears someone talking about a product and goes immediately to Amazon to click ‘Buy’?
I recently heard someone talk about this hand pizza roller that is a game changer. I found one on Amazon and went to buy it, but remember that we have a ‘wish list rule.’
We let the item sit in our cart for a week, and after a week we decide if we really want the item or not.
One of three things will happen at this point:
1. We decide that we don’t really want it and delete it from our cart
2. We decide that we DO want it and buy the item
3. We decide that we DO want to buy the item, but it’s not a priority and move it to our wish list
The wish list has become the real game changer here. I even give the list to my family when Christmas rolls around. It’s a win-win for everyone. I get items that I want and they don’t have to think about what to buy me — it’s all right there.
Protip: If you leave items in your cart for a week, often you will receive an email from the company with a coupon code. Etsy is famous for this!
Get Out Of Debt
According to CNBC, the average American has $38,000 of non mortgage debt. By not having debt, our income is freed up, allowing us to put more towards saving. On average we are putting away between $4,000-$6,000 every month into our savings and investments.
Whether you work the Debt Snowball or the Debt Avalanche, paying off your debt is a sure way to start winning with money.
Work Hard
Over the past four years I’ve busted my butt growing my business. I work on my business 30 hours a week on top of my full time job. We have grown our income over $40,000 in just 2.5 years.
My husband and I have also worked out tails off at our day jobs. We’ve worked extra hours unpaid, we’ve worked on projects that weren’t in our job description and we’ve worked overtime when we wanted to go home.
Working tirelessly like we have has been a sacrifice for us. We’ve struggled with burnout and lost friendships. At first you say no to a couple dinners and then the invites become further apart. Before you know it, you haven’t seen some of your friends in years– or even remember the last time you talked to them.
If I had to do it all again, would I make friendships more of a priority? Absolutely. I tear up as I think back of the incredible friendships and relationships we’ve had in the past.
Work your butt off, but also have work life balance and make friends and family a priority.
Best place to put your savings.
Now that we talked about how to increase your savings rate we need to talk about WHERE to put your savings!
I keep my savings in a high yield savings account so that I can make MONEY on my MONEY! Compound interest is a wonderful thing.
Albert Einstein reportedly said it. “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”
I recommend CIT Bank, as they have one of the highest paying interest rates at 1.75% APY, FDIC insurance, no account opening or maintenance fees, and daily compounding interest to maximize your earning potential!
Ways I save money:
Here at Freedom In A Budget, I am all about saving money! Here are some of the EASY ways that I save money:
•Billsharknegotiates lower prices on your monthly bills to save you time, money and hassle.
•Fetch Rewardsis a free grocery savings app that rewards you just for snapping pictures of your receipts. That’s it. Really.Free gift cardson groceries on thousands of products every day, no matter where you get your groceries.
Just scan your receipts and get gift cards from retailers like Amazon, Target, Ulta, Applebees. Use codeQHKBHto earn 2,000 points ($2)!
•Credit Sesameoffers Credit Score and Monitoring, Savings Recommendations and Identity Theft Protection.ALL FOR FREE.
•CIT Bankoffers high interest savings accounts and CDs to provide a safe, secure way toearn moneygrow your savings.
•Gabiis a full-service, online advisor who compares all your insurance options to find you the right policy, all in under two minutes.
•M1 Financeis an easy to use brokerage platform that allows you to invest in Fractional Shares and auto reinvest!
•WebullGet 2 Free Stocks on WeBull when you deposit $100 (Valued up to $1400).
•Glasses USASave money by buying your prescription glasses, contacts or prescription sunglasses online. They have an easy to use virtual mirror so you can see what they look like on and carry tons of name brands up to 65% off your first pair.
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