Kathleen’s note: The following is Kassandra’s take on the “Save 50%” movement we have here on the blog, and on Facebook. Are you saving 50%? Do you want to try? Tell me your story! Take it away, Kassandra!
I began saving half of my income without realizing it some years ago. Back then, I was in the midst of paying off $55K worth of consumer debt. I had made some tough choices in order to accomplish this and it resulted in a significant change to my net worth and also my mindset regarding money.
I wanted my debt to be gone more than anything and I was living alone at the time so I only had my income to depend on. At one point, I took what many may consider, a drastic approach by selling most of my furniture and living as a roommate for a year.
These changes, along with cutting down other monthly expenses such as food and entertainment, freed up over 50% of my take home pay to direct at my debt.
Once I became debt free, instead of absorbing the excess funds into my spending, I knew that I could accomplish other goals such as an earlier retirement, getting married and immigrating from Canada to the US, and buying a property if I redirected the money into savings and investments.
Now that I am married and live in NYC, our housing costs have increased considerably yet we still manage to save 50% of our combined incomes. If you have been wanting to save more than you already do, here are my suggestions on how to get it done.
What Will It Take To Save 50%?
You really, really want to do this. You have decided that it is a sound way for you to achieve your personal and financial goals.
2. Knowing Your Why.
Now that you know you want to save half of your income, why do you want to take on this way of living and what do you intend to gain by doing this?
3. Spending Review.
Challenge every expense and see how you can reduce their costs. Eliminate or adopt alternate ways of getting the same thing. Learn to be more self-sufficient and lower your overall expenses.
4. Allocating Resources.
What is the plan for the increased savings? Outline your goals and determine how much money should fund each one based on the estimated timeframe to complete them.
5. Making Hard Decisions.
You may decide to downsize your living space because it costs too much or is more space than you need. Maybe you want to pursue a new career that will net you more money for your goals. Whatever major decisions that result, you must be emotionally ready to implement them.
As with any other goal such as training for a marathon or learning to play a new instrument, being good at saving money requires you to be consistent and deliberate. You may end up saving a bit less in a given month but stay focused and keep saving nonetheless.
For those who want to save more of your income but cannot imagine saving 50% from the get-go, don’t quit before you try. Begin by aiming for 10% to 20% more than what you’re currently saving. With time, you will find opportunities to increase your savings to your desired level.
However, if you have done all you can to lower your expenses and you still find yourself short on savings, then it’s time to earn more. Prepare your case and ask management for a raise, work paid overtime hours, find a higher paying position or contract if you are self-employed, work an additional part-time job or market a skill or ability you already have and get paid for it.
Kassandra is a self-employed wife and step-mom striving to live life beyond what money can buy. She writes about a variety of topics and personal experiences that all intersect with money. You can communicate with her directly on Twitter and at More Than Just Money.