It is crazy to think how far we have come in just three years. Never did I think there would come a day that I would be planning to save nearly half our income each month. For so long I lived with a scarcity mindset. I thought only millionaires were able to live a financially secure lifestyle. Well, let me tell you, that’s is just not true. No matter what size your paychecks are, there are always things you can do to be smarter and save more. So let’s talk about what steps you can take to potentially start saving half your income and create financial security.
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I’m not saying every single person should be saving half of their income. There isn’t a one size fits all cure to finances and that’s ok.
Personally, we are choosing to work toward saving half of our income because for so many years…we didn’t save anything. I am 32 and my husband is 40 and with the exception of a 401K, we haven’t been able to keep a saving account if our lives depended on it. (Even the 401K was in jeopardy for a while.)
Our plan to save half our income is in order to help build up the savings we should have started years ago. We want to make sure we are financially secure in case of emergency and hopefully retire early and/or travel more.
We’ve personally decided to open a Savings Builder account through CIT Bank because it only requires $100 per month to gain an awesome interest rate of 2.45% — our current savings account offers .03%!
If you plan on building big savings that you will not be making
There is, of course, no quick solution especially if you find yourself with serious financial struggles.
I hate to break it to you, but saving half your income is going to take some work on your part.
There are some basic percentages to live by when it comes to your budget. They look a little something like this:
To really breakdown these percentages, and the rest of your budget, I have several printouts in my Fun Sized Budget Bundle that are designed to help you every step of the way.
If you are on the low end of these percentages, you’ll find yourself with 50% of your income left to spend! In a perfect world, with no medical bills, clothing, car repairs or debt, this would be a quick fix to saving half your income. Unfortunately, we all know, it’s not always that simple.
The higher end, you’ll find yourself with around 20% of your income left. That can make things a little tighter, especially if you do have medical bills and debt to pay off.
So what do you do?
It’s time to look at your budget and see where you can “trim the fat” so-to-speak.
With the 4 categories listed above, the only budgeting section you probably aren’t able to make any simple changes with is your housing expenses. Sure, you can turn off the lights more or try to save water, but you won’t be able to reduce your budget instantly. See how to reduce your bills.
Reducing your giving or savings amounts is never something I would recommend although sometimes it is necessary in order to help get you back on
This leaves you with your food and other budget to work with.
The best way to limit your spending on food each month is by coming up with a practical, sustainable grocery budget. Personally, I love Jordan from Fun Cheap or Free’s super simple method of giving yourself a $100 per person per month food budget. I have stuck with this method ever since we began getting serious with our finances.
Checkout my exact grocery haul that was totally healthy, gluten free and under $100:
If you are not the greatest at meal planning, don’t miss The $5 Meal Plan. Created by a busy mom of 4, there are meal plans and grocery lists to match almost every diet need.
The best way to find waste in your “other” budget is by literally busting out your monthly statements (you can usually do this online) and calculating all of your unnecessary spendings.
In the past, for us, this has meant alcohol, nail polish,
If you are not living your life on a budget, I guarantee you will be crazy surprised to find just how much money you are wasting each month on tiny little purchases under $5!
Take note of this excess spending and just imagine for a second what it would mean for your family if you started saving that money instead of carelessly spending it!
Now it’s time to tackle that debt! This is the absolute best way to get more money permanently back in your budget!
Just like you took the time to look at your “other” spending, take a moment to add up how much you spend each month on your debt payments.
Once you have calculated how much you are spending on debt each month, you’ll know just how much money you could be saving each month instead.
There are many different methods that work to pay off debt. My personal favorite is the Debt Snowball. Using this method, you don’t have to be great at math. It’s a simple, easy to follow process that works!
With the Debt Snowball, we were able to pay off $6,000 of debt in only 6 months! Then (like fools) we took a break from debt payoff!
When we started up again, we paid off over $17,000 of debt in 12 months! Now, for the first time in our entire adult lives, Tom and I can say we are debt free!
For the full guide on how the Debt Snowball works, check out my YouTube video that explains it all and
Now that you’ve gotten to really dive into your finances, the next thing to do is get started on a budget!
As I said, I have all the budget, debt payoff, and savings printouts you could ever possibly want in my Fun Sized Budget Bundle. So if you feel like you would really benefit from some hands-on budgeting materials, you don’t want to miss this handy bundle.
To get a basic budget started, simply start with how much you make each month. If your income is inconsistent, you can take the average of 3 months worth of pay.
Next, do the same 3 month average to determine your gas expenses. Doing this will help give you a more practical idea of how much money you should be planning on spending on gas each month.
Now that your eyes have been opened to how much money you’re wasting and where you are wasting it, use this as an opportunity to make some serious changes.
Instead of carelessly spending your money each month, start taking steps toward being more frugal.
Never miss an opportunity to save on a planned purchase.
What does this mean?
This means that hitting up every SALE you see is not being frugal. It means that when you have thought long and hard about a purchase, take time to also explore your best money saving options. Can you buy the item at a discount? Could you purchase a refurbished version of the item?
Being frugal does not mean you buy things just because they are on sale!
My favorite savings app that you can download on your phone is Dosh.
The reason Dosh is my favorite is
This is great because you are less likely to spend money on things you wouldn’t otherwise need. Instead, you make some extra cash only on the things you were already planning to purchase. Download Dosh here.
We’ve all heard about the dangers of trying to “keep up with the Joneses'” but are you guilty of it?
Checking your budget percentages should have given you a pretty good idea as to whether or not you are living above your means.
If you are spending more than 30% of your monthly income on housing expenses (rent/mortgage/utilities) then, you are definitely pushing your lifestyle to the breaking point.
When we bought our “big house” 5 years ago because we could afford it. —At least on paper. We were approved for the loan amount, we had enough monthly income to pay for it…but we quickly found ourselves house poor.
It didn’t help that we had no budget for planning our money, but it’s safe to say, we were spending far more on a house than we should have been. Budget or no budget. Check out our full downsizing story.
If this sounds like you, it might be time to have a talk with your spouse and consider a change.
Downsizing doesn’t mean that you failed. It means that you see more value in other areas of your life and you want to make sure you are financially secure.
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So besides reducing wasteful spending, revamping your budget and paying off debt, the best way to have additional money is to work for it!
What do ya know!?
Finding small, easy ways to make extra cash is the best way to either help you pay off debt or start saving half your income in order to create financial security.
While there are tons of ways to bring in additional income to help save half your income, I have compiled a list of the most practical, easy start options available:
Remember Grandma’s change jar that accumulated all her unspent pennies? Well, you could easily start your own, or you can download the Acorns app that does it for you.
By no means will Acorns help you start saving half your income each month, but it will absolutely help you save every last penny that you are able to! Literally.
For example, if you spend $3.50 on a cup of coffee, Acorns will save .50 cents for you! Over the last few months, just by saving our spare change, Acorns has created a tiny little savings of $300 for us! It’s crazy how much those pennies add up! Get $5 free when you sign up.
Another app similar to Acorns is called Digit. Digit works by reviewing your spending and automatically tucking away small amounts of money for you into a “Rainy Day Fund.”
In the last 10
The good news is, you can set a limit to your account balance. For example, if you want to make sure you have at least $50 in your bank account at all times, Digit will keep an eye on this and if you fall below that $50, Digit will automatically put money into your account to maintain your balance.
If you struggle with over-spending this could definitely be a nice safety net to have and can prevent you from having to pay overdraft fees! Learn more about Digit.
When you are ready to start saving half your income, the best way to do it is by opening an online account that pays you huge in interest. The Savings Builder account through CIT Bank is one of the absolute best ones that I have found.
It requires an opening balance of $100 and a $100 per month deposit. That’s it!
That means, if in one year all you can deposit is $100 per month, you will have $1,316 in the bank by the end of the year!
Opening a savings account that actually pays you to save is one of the best ways to make sure you are getting the most out of your savings and is a great way to start saving over half your income. Learn more about the Savings Builder.