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

Confession: I Let Money Control My Life

Confession: I Let Money Control My LifeI’ve talked about not letting money control your life before, and I recently came across the topic again.

The other day someone told me it’s impossible for a personal finance blogger to not worry about money. They were saying I should be telling everyone that being controlled by money is actually a good thing.

I have to disagree though.

I don’t think that in order to be in charge of your financial well-being that you have to bow down to money and let it completely control your life.

Even though I say that though, I still let money control my life a little bit.

I’m not as bad as I used to be, but I still let money control my life more than I should.

Here are some of the things I constantly think about: 

  • I worry about bad business months. Yes, I know I publish my monthly income reports and I am doing well, but as a freelancer I still have the occasional week or two almost every month where everything seems completely dead. Also, sometimes I think about how life is almost TOO good to be true, and I wonder when it will all come falling down on me. I know, I am such a Debbie Downer!
  • My emergency fund is too large. Yes, that IS possible. Our emergency fund is around a full year of expenses right now. I am weird and I just don’t feel comfortable with it being any smaller. This means that I’m not investing this money more aggressively even though I am young. I am losing out on money and I don’t know if this is something I can ever change.
  • Home repairs. I sometimes act like my home is going to collapse. I don’t know why I’m like this. We’ve never really had anything major happen with our home, but whenever the smallest thing happens, I tend to worry that it’s going to cost $10,000 to fix. In reality, there would have to be something significantly broken in order for it to cost that amount!
  • I sometimes compare myself to others. When I say “compare,” I’m talking about comparing how I am financially doing to how others are doing. I read a lot of personal finance blogs and it just seems like all of these people are professional savers, whereas I’m just nowhere near as good as they are.

 

Here are some of the things to think about if money is controlling your life.

 

Money is just money.

This is something I always have to tell myself when I start having a money control freak out. Money is JUST money, and nothing else. Money doesn’t lead to happiness. Sure, it can make life easier sometimes, but life isn’t all about it.

Life will go on and freaking out about money doesn’t change the situation you are in. You need to actively change your life.

For me, I would always calculate our budget. I’m talking like every single day. I would spend hours upon hours trying to figure out our budget, financial goals and more. And, if I wasn’t on track it would upset me.

However, living with regret and being upset doesn’t change your situation!

If you want to see change, you need to actually do something.

 

I need to stop comparing myself.

I’m not talking about comparing myself in a keeping up with the joneses way. I’m talking about comparing myself to others who may be doing better financially.

For example, I came across an article recently that stated that the average person my age should have like $200,000 saved for retirement already. I thought that amount was absolutely insane, and I felt upset that I’m not at that level. Then, I started reading the comments and others who were even younger than me were saying that $200K seemed low.

HA, who are these people?

I then all of a sudden wanted to start saving even more. Yes, I make a decent income, but all of that is before taxes (and taxes take out a significant chunk). For me to have been at the level that these people were talking about, I would have had to take some drastic measures by now.

 

Does money dominate your life? In what ways? Are you trying to change that?

 

Image via Flickr by TaxCredits.net

Six Questions To Know More About You

Six Questions To Know More About YouHello everyone! I hope everyone is having a great week. I recently realized that I haven’t done a Question and Answer post with all of you in a long time.

As always, I love hearing more about all of you.

Answer the questions below (skip any if you would like) and lets all get to know each other a little bit better.

1. What’s your name, and what do you do for a living?

Well, I’ll start off with an easy question. In case you didn’t know, my name is Michelle. For some reason, people don’t think that’s my real name, but it is! Even though I started off “anonymously” blogging, I always used my real name.

I am currently a full-time freelancer.

I have been freelancing for a few years now, but I just recently switched to only freelancing in October of 2013 when I left my day job to pursue this full-time. I provide a wide range of services. These include: managing my own websites (I have several); managing websites for others; staff writing; social media management; and more.

2. Do you want to follow your passion? If so, what is your passion?

This is my passion. I really enjoy what I do and I’m still happy that I left my day job to do this full-time. I don’t ever see myself going back and working for someone else again! :)

Read Pursuing What I Love or What Brings in the (Stable) Money if you are interested in hearing more about this topic.

3. How much debt do you have?

My student loans are completely paid off (thanks to side hustling), but we do still have a mortgage.

We are not trying to pay it off quickly though because we do plan on buying a home within the next 2 years. I believe our mortgage right now sits at around $112,000. We live in St. Louis where housing is very cheap.

4. Where do you want to live? Do you live in your dream location?

Right now, we live in St. Louis. Around one year ago, we were looking to sell our current house and buy a second one in the St. Louis area, but we decided to stop.

While we do love the St. Louis area, we have been thinking a lot about moving to a different state.

At first, we were thinking about moving to Florida (Florida is still at the top of our list), but now we are really interested in Colorado. We went on a 2 week road trip and saw a lot of Colorado, and it made us really interested in moving to the state. There are just so many amazing outdoorsy things to do there and the weather is wonderful.

What’s your favorite town in Colorado? If any of you live there, where would you recommend?

We want a place with a nice view, a place that is safe, good schools in the area (we do plan on having children in the future), and somewhat nice weather. We’d prefer it to not be 30 or 40 degrees in the summer time! :)

5. What are your summer vacation plans?

We have done a good amount of traveling so far this summer. We went to Colorado for two weeks in June, and we just got back from an 8 day cruise to the Caribbean in July.

Wes is going on a week long hike with a friend on the Colorado Trail (they’re not doing the whole trail as it’s around 500 miles), but they do plan on doing as much of it as they can.

Then, we are going to Belize to meet with a potential client of mine in the next few weeks.

Lastly, we have FinCon which is in the middle of September in New Orleans. Wes is coming with me because he is in the beginning stages of creating his own website. I am excited to share his blogging journey with all of you and I can’t wait to share his website.

I’m loving all of the traveling that we have on our calendar for the next few months. We will be quite active. However, I am a homebody and I usually get home sick haha!

6. Would you rather have a part-time job or a side hustle?

The other day I published an article about why I started a side hustle over a part-time job. Different people have their own preferences, but for me, I am happy that I started a side hustle.

My side hustle eventually led to me freelancing online full-time, and I am now having the best time of my life. I wouldn’t change a thing!

Read my article on my other blog Why I’d Rather Have A Side Hustle Than A Part-Time Job.

Answer away!