Why We’re Saving 50% of Our Income (And a Mid-Year Update!)

Why we’re saving 50% of our income this year (and a mid-year update)

At the beginning of the year, we promised to try to save 50% of our combined incomes. We got a lot of feedback on that post (and almost none of it was positive!). The post got pushed to Yahoo, which made complete strangers question our sanity. So far, thank goodness, Brent hasn’t liquidated all the money and run off to Mexico with a stripper (though I suppose the possibility still exists).

Since my income is somewhat variable (at least the side hustle piece!) and his isn’t, we decided $75,000 was roughly 50% of of our pre-tax income. And that’s the number we’re aiming to hit. We’ll get into the specifics of how we’re doing in a bit, but first, let’s talk about why we’re saving 50%, and why we encourage everyone to aim for that as well.

“I could never do that!” say most people when they hear about our goal. “How are you going to live on 50%?” The internet trolls made the point that two people making $150,000 combined really should be able to save 50%. That’s not a challenge, they say. That’s a rich person’s problem. And they’re right. We really should save half.

Funny thing is, though, without clear goals, you spend what you earn. Mindless spending happens at all income levels. It just doesn’t make as much of an impact when you have more in the bank. How do we curb mindless spending and pay our future selves dividends? Furthermore, why are we saving as much as we are?

Delayed Gratification

If we can make sacrifices now, while we’re kidless and virtually free of responsibilities, we’re more likely to go through life comfortable rather than struggling. We know that we’re in the very beginning of our life together, and that the habits we set now are laying the foundation for the way our future will pan out. So we’re exchanging some dinners out for future security. It’s a fair trade off, for sure.

Insurance for an Uncertain Future

We all know there’s no such thing as job security anymore. But you know what? We can buy security. We can sock our money away for a rainy day, and hope that we won’t need to use it. We’re both working for companies we like, in jobs we’re good at, so the likelihood that one or both of us loses a job is slim, but not nonexistent, and we wouldn’t want to be in a situation where we could lose our house if we lose our jobs.

Freedom Fund

The other side of the coin is that maybe one day, we won’t want to work for other people anymore. I have all kinds of entrepreneurial dreams. By saving 50% of our income, we can fund our dreams, or simply fund an early retirement.

Still Flexing the Frugality Muscle

If we can save 5o cents of every dollar we bring in, we’re setting ourselves up to live simply our whole lives. As our incomes rise, so too will our savings, instead of our spending. Then, if we have kids, we’ll teach them how to do the same.

The suggested savings rate of 10% is abysmally low, and puts too many people too close to the edge. The only way to combat it is to save more.

That’s why we’re saving. Join us! We’re starting the Save 50% movement, and we’re organizing a community on Facebook to encourage each other.

Where We’re Saving

We know that we have to move money before it hits our checking account, so we never feel more flush than we are.

Maxing Out Retirement Accounts

Brent has a 401(k), and is going to contribute $17,500 this year.

Brent also has a Roth IRA, which he’ll max out at $5,500.

I have a Roth IRA as well (I had a traditional, but had to switch because the wedding will bump me into a higher tax bracket and I’ll be ineligible) which I’ll max out at $5,500

Total for the year: $28,500

Total contributed so far: $24,161

We’re 85% there on retirement accounts!

Maxing out HSA

Brent has an HSA that he’s contributing $3,300 this year to.

Total for the year: $3,300

Total contributed so far: $1,673

We’re 51% there on health savings accounts!

Mortgage Principal

Mortgage principal counts as savings (yes it does!) because it’s equity we’re building in our house that will one day translate into cash in the bank when we ultimately decide to sell. We’re behind the target this month because principal increases every month, so it’s a moving target. Same mortgage payment in December means much more goes to principal than it would have in January.

Total for the year: $7,650

Total contributed so far: $2,070

We’re 27% there on the mortgage principal!

Where to Put the Rest

Brent set up a Vanguard non-retirement account, where we’re saving the lion’s share of our combined income. I like these funds because they’re not in regular checking, but they’re still pretty liquid. So we can be aggressive and sock as much money as possible into them without worrying that we’re tying up our money for X years, like we’d have to in a CD.

Total for the year: $28,950

Total contributed so far: $17,494

We’re 60% there on non-retirement interest bearing accounts!

Total for the year: $75,000

Amount we’ve saved so far: $45,398

We’re 66% there for 2014 goals!

The rest goes in our checking account, the account from which we pay all our bills. We keep some cash in that account, but not much, and it feels like this “little backyard picnic wedding” eats more and more cash as we approach the big day.

We’re on track to save 50%, though we’re a little shy of our goal. I lost an important gig that was bringing in a decent amount of “side income” so unless something happens faster than I expect on the hustle front (go! Click all the affiliate links on For Profit Blogging!), we’ll fall short this year.

However, we will not be planning an expensive party in 2015, and can raise the bar on our savings goals.

The cool thing about trying to save 50% is that even if you fail, really hit the wall and fail, you’re saving MUCH more than you would if you didn’t make saving a priority.

How are you doing?


  1. says

    Congratulations! It looks like you are well on your way. Here’s hoping For Profit Blogging and the world wide web can keep up the side hustle income for you!
    I think that we are sort of in the same boat. There’s a profit share at work that wont’ be paying out this fall, so it will be hard for us to hit our target.

  2. says

    Congrats Kathleen. I think you both are building up a really solid future for yourselves. I think if you can save 50% and you aren’t hating life in the process, then why not? Fingers crossed the rest of the year is on a solid path. I lost a couple income streams I was hoping to have (teach volleyball and a big writing gig) too. Boooo! :)

    • Kathleen O'Malley says

      Thanks, Tonya! Yeah, it’s actually been easier than I thought to save. It certainly doesn’t feel like we’re depriving ourselves, which is the point. Once it feels like we’re living like monks, I’m sure we’d both rebel.

  3. says

    I would like to commend you on being 66% of the way there while the year is just 58% over – nice work there.
    What I would like you to do is realize that there is still 5 months left in the year, and while you may have lost a gig you were counting on, there is plenty of time to make up that income in the next 5 months. Dont throw in the towel now, throw in the towel on NYE after you have worked your ass off.
    If you fail then, so what. but if you throw in the towel now, you’ll never know if you would have made it or not.

    • Kathleen O'Malley says

      Thanks, Jeff! All hope is definitely not lost. :) Not throwing in the towel, trying to think of creative ways to bridge the gap!

    • says

      I like this analogy. I use the same philosophy when I’m driving to work and think I might be late. I’m not actually late until the clock hits the hour. It’s a fun game I play! ;-)

  4. says

    Congratulations! I think the goal of saving 50% is awesome! You never know what the rest of the year holds; Hopefully you’ll still make your goal, even with the few hiccups you’re having now.

    I’m not yet in a place that I can save 50%, but I did set a goal of growing my net worth by $10,000 in 2014 (which equals out to about 22% of my gross income, so still not bad!). I also broke that goal down into segments, with principal payments and 401k savings. I’m at the weird point where I’m not sure if I’ll make my goal; It’s possible I may make my mini-goals, but not the overall goal, or vice-versa, depending on where my money ends up. But I’m hopeful the rest of the year will even things out!

    • Kathleen O'Malley says

      Good for you! Saving half is a moving target, right? A stretch goal for many of us. It’s awesome to work toward something difficult, because I know that once we hit this goal, we’re going to adjust toward saving a higher number!

  5. says

    You are doing an awesome job! Based on your previous post, I am “saving” 50% because I’m putting that and more to my debt each month. It really does give me hope that I can have a rockin’ life once I’m debt free. I really can live on less. I look forward to seeing your progress.

  6. says

    I can’t understand why someone would say something negative about trying to save a lot of money! We were able to hit the 50% savings mark a couple of months this year, but we don’t have a mortgage since we rent, so our savings goes into saving accounts, and retirement accounts only. We’re saving so that we can one day buy a house!

    • Kathleen O'Malley says

      I should have tried to find it on Yahoo to link, but then I would have read more comments! Trolls, man. They ranged from “MUST BE NICE to have more than $75K between you!” to “you’re so stupid for combining finances before you’re married” — though the one about Brent running off with a 19-year-old stripper to Mexico was hands down my favorite.

  7. says

    That’s unbelievable that you got so many negative comments on savings more than 50% of your income! I guess people like being slaves to their paychecks, lol. At any rate, congratulations!

    • Kathleen O'Malley says

      You know… I kind of love the haters. :) They don’t come to this sandbox, which makes a difference. They can whine on Yahoo all they want. :)

  8. says

    Huh, I had never heard of a Vanguard non-retirement account before! While it is easier to save more when you have more, good for you guys for making yourselves that money. Getting to the point where you CAN do that is no easy task, and the backstory of getting to that point should be considered before people get all troll-y.

    • Kathleen O'Malley says

      Thanks! Though the simplified version of the backstory is that I was poor until I met Brent… which really gives him WAY more credit than he deserves, but that’s the way the narrative plays out. Like I was tied to the railroad tracks before this big tall man rescued me. Ugh, sexism.

  9. says

    This is awesome for you guys. My better half just got a new job (and a raise!) and we are planning to sock away as much of it as we can. We are also hoping to be able to save a lot more after the wedding expenses chill out (only a few more weeks!). We haven’t done the math on percentages or set concrete goals yet, but I think (hope) 50% would be a viable goal for us.

    • Kathleen O'Malley says

      Congrats! That’s A) awesome about the promotion and raise and B) fantastic that you’re going to put the difference toward your goals. Otherwise, the money gets slippery.

  10. says

    Great savings goals and achievements, Kathleen! Your post made me look at our situation and we are at about 45%. We save over $12K into retirement savings and have paid of $60K of debt/mortgage principle each year for the last two years, so 72K total. We are currently running shy of hitting the 60K this year, at only $52K, but we are also building up the emergency fund a bit more, so maybe in terms of the total picture we will hit that number.

    But in fairness, it’s easier to save 50% of a larger number than 50% of a smaller number. If one saves 50% of $150K, then they save $75K and spend $75K. If a family only makes $100K but saves 50%, then the save only $50K, but they only have $50K to spend which is more difficult. If they spend the $75K that the larger income earners are spending, then they are only saving $25K or 25%. However, even 25% is better than the 10% savings targets promoted. From what I know about PF today, 10% savings is the bare minimum you want and some people don’t even do that. If you want FI earlier, you need to save at much higher rates.

    • Kathleen O'Malley says

      YES I agree with you — it’s much easier to save half when there’s more in the pile. However, it’s entirely possible to save more than 10%, no matter your income level. FURTHER, it’s really easy to just spend spend spend, regardless of income level as well. So, mindful mindful. And GREAT work so far this year!

  11. says

    I love that you guys are trying to make saving 50% normal! That was my goal out of college and I have met or exceeded that goal every year! I’m now trying to shoot for 80%, but I think that’s still a bit of a stretch for me.

    I saved about 50% my first year out of college, 60% my second year, 65% my third year, and then 75% last year. I should be around 75% again this year. I think my boyfriend saves somewhere around 50% and should be able to get that up closer to 70% once he moves in with me. I think we’re doing pretty well for being in our mid-twenties :)

  12. Mike B says

    I’ve been saving 50%+ myself for the last three years; it definitely adds up.
    Granted, the first couple of years I was repaying loans, but I know a lot of my friends were too. So long as you’re making a bit more than you need to cover the necessities of life, over time conscious consumption can have a big impact.

    I may not be able to look back at three years of living in an apartment with a great view and spending lots of time in bars, but in exchange, I can check my accounts and will the investments to snowball just a little bit faster… Plus I still have the flexibility to indulge in the occasional crazy thing, like flying internationally to attend a wedding, without breaking the bank.

  13. says

    First of all, I envy you guys. Saving 50% of your income is not only great but mind-blowing. I never crossed the 35%. However, while curiously checking the blog post, I didn’t find any investment in stocks. Are you avoiding stocks as you have much more fund than one need for a healthy lifestyle.

  14. Q says

    I am going to be picky here, but if I add up your goal numbers broken out above, I total $68,400. Are you saving the remaining $6,600 in your checking? Or are you taking the tax-affected value of some of these numbers? Not ripping on the movement at all and it’s still great that you’re saving that much. But the accountant in me notices that your numbers don’t foot as currently stated. :-)

    • Kathleen O'Malley says

      YES you’re right! I didn’t add it up — but yes, the rest will be in our checking account. Thanks for your careful eye! :)

  15. says

    That’s great that you are striving for 50%. It’s a challenge but it’s not impossible, right?! My husband make a little less than $75,000. At the beginning of this year we were trying to save around 65%, but it’s not looking like we will make that THIS year. I think we will hit the 50% mark. Not too shabby for a couple of teachers. Good luck and hang it there with your 50% goal! It gets easier every year.

  16. says

    Wow, this is impressive. We are cutting back and re-evaluating budgets after a somewhat expensive wedding (I mean, cheap by most standards but still expensive for us). We are considered in the “high earner” bracket, though I know that doesn’t say much for a couple living in the greater Vancouver area, so we should be able to save far more than we are/have.

  17. says

    Came over from GRS… great work!! Looks like you are well on your way :) You guys seem to be really in sync… it’s great to have such a specific plan of where you are saving the money, I’m sure that’s huge for keeping things on track!

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