How To Save 50% Or More Of Your Income

How To Save 50 Or More Of Your Income

Before I started blogging, I thought a good percentage to save each month was anywhere from 10% to 20%. I have even read an article where a “finance expert” recommended 5% for retirement savings because they said it was good enough.

Now that I look back on those figures, that is just not nearly enough.

However, that’s what many news articles will tell you. They will tell you that anywhere from 5% to 20% is all you really need. That might work for some, but that’s just not good enough for me.

Recently, I was talking to someone who told me that they save around 85% of their after-tax income each month. I thought that was absolutely insane, but I was a little jealous.

This person goes a little to the extreme in order to save this crazy amount of money each month, but they are happy and that’s all that matters, right?

Right now, we save around 60% of our income. That amount could be a little bit higher but we recently had our wedding (and shoveled a lot of our money towards that), we have been traveling more (we have bought a fair amount of camping and hiking equipment in the past 2 months), and a lot of my business income each month goes towards taxes.

Here are different ways to save 50% or more of your income:

 

Make more money.

Making more money can really help you reach an income percentage goal of over 50%. This is because there is usually only so much money you can save, but the amount of money you can make is endless.

You could work a part-time job, a full-time job, multiple jobs, start a business, freelance, and so on. You could also search for passive income and bring in more money with minimal effort.

There are so many things you can do out there to try to make more money.

I recommend reading my article from the other day Would You Rather Work For Less Money Or More Money? I know of a few finance bloggers who have worked or are working jobs that pay extremely well (but are not jobs that they love), so that they can retire in their 30s. Yes, it’s extreme, but every person is different.

 

Lower your budget.

Okay, one of the reasons for why I am able to save so much money each month is because of the amount of money I make. I am not going to try to hide that.

However, just because you make less money does not mean that you can’t save money as well.

The person who I mentioned above who saves 85% of their income makes around $3,000 a month. Yes, so that means they spend $450 a month. I know this isn’t possible for everyone, but if this person can cut their budget then I’m sure others can save more than 20% of their income.

There are many different expenses that you can probably cut out of your budget or at least lower. Just because you are lowering your budget doesn’t mean that you are going to hate life.

Some expenses you can lower or ways to save money include the below. Like I said, everything isn’t for everyone, but even a small change can help you out.

  • ATM fees. Why do people do this to themselves?
  • TV. Cut your cable, satellite, etc. Even go as far to go without Netflix or Hulu.
  • Restaurant spending. Start eating at home more! Become an amazing at-home chef and make your family love your new found skills :)
  • Bring your lunch to work. When I had my day job, I always brought my lunch. This was to save money, but also because I hated wasting most of my lunch hour driving somewhere to get food.
  • Pay bills on time. The goal here is to try to avoid any late fees.
  • Shop around for insurance. This includes health insurance, car insurance, life insurance, home insurance and so on. Insurance pricing can vary significantly from one company to the next. When we were shopping for car insurance last, we found that our old company wanted something like $205 to insure one car for one month, whereas the new company we have now charges $50 a month for the same exact coverage. INSANE!
  • Fuel savings. Combine your car trips, drive more efficiently, get a fuel efficient car, etc.
  • Trade in your car for a cheaper one. For us, we are car people. Cars are one of our splurges. However, if you only have a nice car to keep up with the Joneses, then you might want to get rid of it and get something that makes more sense.
  • Live in a cheaper home. I’m not saying you need to go live in a box, but if you live in a McMansion then you may want to think about a smaller home. This way you can save money on utility bills and your mortgage payment.
  • Learn to have more frugal fun. We don’t spend anywhere near the same amount of money on entertainment as we used to. There are plenty of ways to have frugal fun.
  • Cut your travel budget. There are plenty of ways to travel on a budget. One way is to start earning credit card rewards. I like the Barclaycard.
  • Lower your cell phone bill. Instead of paying the $150 or more that you spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $5. YES, I SAID $5! If you use my Republic Wireless affiliate link, you can even get $20 off their already super cheap prices.

I spend less money than I used to and I am happier than ever.

 

Are you trying to save 50% or more of your income? Why or why not? What is your savings rate right now?

What are you doing to reach your goal?

 

Image via Flickr by Sheila Sund

Would You Rather Work For Less Money Or More Money?

Would You Rather Work For Less Money Or More Money?Okay, the question in the title of this article isn’t as easy or even as clear as it sounds. I’m sure everyone would take a job for more money if there was nothing different between the two jobs.

My question today though is a little different.

Would you follow your passion if it meant you were to make less money? Or would you rather work in a position that you really hate so that you can earn more money?

When I decided on my college major, I decided on something that I thought would bring me to a corporate job so that I could make money. I really had nothing else on my mind. I thought having a “safe” major would make me happy enough in life.

Boy, was I wrong! Yes, I had a comfortable job, but I wasn’t happy.

After three years of working as a financial analyst, I knew it just wasn’t for me. Yes, even though I make a very comfortable income right now, my last job was much “safer.”

I was on track to become President at the company, I had a good salary, I received good benefits, and I knew the job and the company weren’t going anywhere.

However, even with all that safety, I wasn’t happy. Instead, I wanted something that I actually enjoyed. I also wanted to do something that would allow me to have a flexible schedule and do other things that I enjoy outside of work.

Even though I love working as a financial blogger and freelancer, I don’t think I could ever go back to a financial firm as an analyst (or any position at a firm). It’s just not what I enjoy. In fact, yesterday I received an email from a headhunter asking me if I would like to take a senior level position at a local financial firm (it’s a big firm with over 100 employees). I had to laugh and file the email away because even though they were offering a hefty salary and even a signup bonus, I knew I was not interested.

Not everyone is the same, and I know many people who are pursuing jobs with a higher income. I also know of many people who are pursuing jobs that they love that pay less.

Below are a few positives and negatives for each side of the argument.

 

Less money may mean a delay in reaching financial goals.

If your main goal right now is to pay off debt as quickly as you can, then you may be interested in working towards making as much money as you can. That may mean working a job you hate, working long hours, working multiple jobs, and so on.

When I wanted to get rid of my student loans as quickly as possible, I wasn’t interested in pursuing my passion. I was interested in eliminating my debt as quickly as possible so that my life could actually “begin” on my debt payoff date.

I was working 100 hour weeks for years. I was going to college, working my day job, and working my side hustles for what seemed like forever. In the end, it all paid off. Luckily, I didn’t have too much student loan debt, so I didn’t have to struggle for a very long time.

However, if you are interested in pursuing your passion, then it may mean that you have to delay your financial goals or even put them on hold. It may take you a little bit longer to reach your goal, but you have to weigh the positives and negatives and you may find it worthwhile (or not).

 

A lesser paying job may mean more time.

Following your passion can also mean that you take a job that allows you to pursue your passion in your free time. Even if it’s not a job that you absolutely love, you might decide to take a job for less money because you are able to pursue your passion outside of your normal work hours.

You might have more vacation time, a better and/or more flexible schedule, a less stressful job, or something else.

For me, I’m all about having a flexible schedule. That is one of the biggest positives for me of the freelancing that I do right now. I love freelancing, but I also love that it allows me to be in control of my day.

If I want to ride my bike on a beautiful trail at noon, I can. If I want to go out to lunch with my friends, I can. I am no longer bound by my work day.

 

Following your passion may mean that can’t retire until later. 

If you are wanting to retire quickly, then choosing a job with less money will not get you there as quickly. I’ve heard of many people taking a job that they absolutely hated, working it to death and then retiring very early.

I don’t think that route is for me, but I can understand why others would choose it. If you “only” have to suffer for a decade or two and then you get to have the time of your life, that would be very tempting.

If you decide to work your passion, you may find yourself working for much longer. Following your passion doesn’t always equal less money, but in many cases it does.

This leads to…

 

Would You Rather Work For Less Money Or More Money?

You may never have to work a day in your life though.

Following your passion might mean that you never actually work a day in your life.

If you truly love what you are doing, is it actually work? Or are you just having a great time?

Following your passion can be great because you are doing what you love to do, and you actually look forward to work. If you are going to spend one-third of your life working, then why not do something that you love?

 

What would you rather do? Take a job you hate for more money, or take a job you love for less money?

 

Images via Flickr by TaxRebate and donireewalker

 

Update: Nine Months of Being Self-Employed

Update- Nine Months of Being Self-EmployedMy last day at my day job was in the beginning of October of 2013.

That means it’s been around 9 months since I left my day job to pursue full-time freelancing.

It feels like it’s been much longer than nine months though. Time is flying by, but it also feels like it’s been forever since I drove to work and sat in my office unhappily for nine hours each day.

I still remember when I first told my employer that I was leaving. I was dreading the day. I was extremely nervous about what my bosses would say (in my head I was a complete wreck), and I kept saying to myself “Six months from now all of this will be long forgotten.”

Now, it’s been nine months and I haven’t looked back once. I still have no regrets and I am EXTREMELY happy with the decision I made.

Self-employment is still going very well. I am enjoying each and every single day. I enjoy waking up, working, having a flexible schedule, and everything else that has been going on.

Below is my update after being self-employed for nine months.

 

Not having a commute is still wonderful.

I don’t see this ever changing. Yes, I like car rides but I don’t like them when the end goal is to take me to a boring and stressful job.

Being able to just wake up and get straight to work is a great thing. Yes, this usually means that I stay in my pajamas for a good portion of the morning (hmmm maybe into the afternoons), but it’s nice to be able to complete so much work in the early mornings.

 

I’m still getting in more “socialization” even though I work from home.

When I decided to make the switch to working from home, many people seemed worried that I would be bored and lonely.

The truth has actually been the exact opposite.

When I had my day job, there was no talking whatsoever. It was extremely boring and not having a single office friend (I worked independently in a field filled with men who were 45 and older) got old really quick.

Now, I can see my friends and family during the day when they are off from work (I have too many nurse friends). I also talk to other bloggers and readers pretty much all day long as well.

 

The thought of unstable income.

The unstable income is something that still gets me every now and then. There are weeks where I will make hardly no money, and, of course, times like those can make a person nervous.

As a freelancer, I’m sure these slow weeks make most nervous because it almost feels like everything has dropped off the face of the earth.

 

Traveling and being location independent.

One big positive of self-employment for me is the fact that all I need in order to work is a laptop and an internet connection. This means that I can pretty much work from wherever I want.

I have been traveling a lot so far this summer (one week in Vegas, 2 weeks in Colorado, one week in the Caribbean), and I worked nearly the whole time as well. I just scheduled as much as I could ahead of time, and then I brought my laptop to complete tasks along the way as well.

I would like to become more location independent then this though. We have been thinking about taking a long hiking/camping trip where we would drop off our car someplace and hike on some amazing trail that is thousands of miles long (okay, maybe just hundreds of miles to start off with).

I’m just not sure how that would work though as I, of course, still need to work.

Any ideas? Or is this completely hopeless? Haha a girl can dream right?

 

I still enjoy freelancing.

When I publicly announced that I was making the switch, I had many people tell me that I would grow to hate freelancing. That has not been the case at all.

I still love freelancing, and I enjoy it more and more every day. It’s great to actually be my own boss. I love how everything I do affects my business and that I am actually growing a business of my own.

 

What else do you want to know about my nine months of being self-employed?

How is self-employment treating you?