In today’s economy, and with the cost of living increasing significantly, it can seem almost impossible to save a few dollars, let alone save half your income. However, what if I told you there were ways to make it a lot easier? Below are the top ways to save half your income. It’s definitely possible!!
How to Save Half Your Income
This post has been written by our talented staff writer, Kimberly Studdard.
1) Don’t Be Afraid To Automate Your Savings
The first step to save half your income is to automate your savings. It’s hard to spend or fret over the money you don’t even see. If you’re worried about needing that hard-earned money for bills or unexpected expenses, start small. See if you can start by saving just $20 a paycheck, and then increase that as your comfort level grows.
For me, even though I’m a business owner, I still save at least 15% of all of my earnings (post-tax).
- Since I don’t get a traditional paycheck, I use Catch.Co to help me save my money easily.
- If you do get paid from a day job, you can usually have them split your paycheck, or use an account like Chime or Ally that works just for your savings.
2) Track Every Penny You Spend
You’d be surprised to know how many people think they don’t have any money to save, only to track their spending and realize how much they could be saving. For example, I have a friend who only makes $30,000 a year and felt like she couldn’t save because she was a single mom and had to pay all of her own bills.
After tracking her spending for just a month, she realized she spent $200 on unnecessary items and could save that money instead. That’s $2,400 saved in one year, just by cutting out things she didn’t even need.
You could do the same thing too!
Track your expenses and spending for one month, and if you’re like most people, you’ll find that you’re spending more money on items you don’t really need than you thought.
3) Side Hustle + Save The Extra Money
I’m going to be honest with you. I hate that most people have to side hustle just to make ends meet. I wholeheartedly believe that in America, no one should have to work multiple jobs just to pay for basic necessities. With that being said, I do like the freedom that side jobs and hustles give us to earn more income and not have to “cap” our earnings just based on a day job.
If you find yourself living on your full-time income, but want to start saving more money (or would like to save half your income), try side hustling. There are quite a few that could be quite lucrative, allowing you the opportunity to sack away a ton of money, without having to quit your day job or rely on it to help you save money.
4) Set Financial Goals
What are you really saving for?
- Maybe it’s to pay for a car in cash.
- Or, maybe you want to buy a home and put down a hefty down payment (or even better, buy it in cash too).
- Maybe you want to save for retirement and live a cushy life down the road.
Whatever it is, setting financial goals will give you purpose when you want to save 50% of your income.
5) Be Smart About Your Living Situation
I didn’t really follow this step, but if you can…
- live with your parents.
- Or with friends.
- Or just get roommates.
There are so many ways to cut costs and be smarter about your living situation. At least until you can save more money and afford to live on your own. This is especially important to do if you live in a high-cost area, or if half of your paycheck goes towards living expenses.
Where I live, houses are fairly cheap, but neighborhoods are desirable. So, many of my friends have taken advantage of buying a home for super cheap, and then “house hacking”.
They’ll start renting out rooms, finished basements, and more via Airbnb or as landlords.
The people who rent from them pay for most, if not all, of the mortgage, since rent prices here are 3x the amount of mortgages. This helps my friends, who can’t afford a $1,800 rent payment, but can afford an $800 mortgage, especially if it’s mostly covered from month to month! This also means that they can save most of their money, and have a cushion if anything breaks down or needs to be fixed.
Be smart about your living situation. This alone can help you save half your income. In fact, the #1 biggest expense for Americans is housing. By hacking your living situation, you can get yourself ahead of the game.
6) Don’t Try To Keep Up With The Joneses
Seriously. Stop doing this.
- You don’t need that fancy newer car.
- You don’t need a 2,500 sq ft house in the suburbs,
- and you certainly don’t need that new coffee machine.
While there is nothing wrong with any of those things, they aren’t needs, they’re wants. And trying to buy them just to keep up with what society says you should have/want is dumb. I’d rather you save half your income, be debt-free, and save for retirement.
Who cares if you’re driving a beat-up 2002 Honda that’s paid for in cash? Someone who’s jealous of your situation, that’s who. If people are taunting you to “live life” and “spend a little more”, or if you find yourself constantly comparing yourself to people you’re around, it’s time to break away. The Joneses are broke, and keeping up with them will leave you broke too.
Related: Meet the Real Joneses
It’s Time to Save Half Your Income
If you really want to save half your income, it will take some uncomfortable and sometimes radical choices to get there. But it can be done. And, seeing all of that money adding up in your account will make the sacrifices worth it.
Are you ready to save half YOUR income?
AUTHOR Kimberly Studdard
Kim Studdard is a strategy consultant and course launching expert. When she isn't spending time with her daughter and husband, or crying over This Is Us, you'll find her teaching other mompreneurs how to scale their business without scaling their workload.