Do you want to save 50 percent of your income? Of course you do. Well, unless you’d rather use that money to buy stuff then you probably don’t care.
Anyway, that’s so not the point.
You could do amazing things if you were able to save 50 percent of your income. You know, things like buying a house with cash, retiring early, travelling the world, and in general having complete control over your life.
Saving fifty percent of your income is hard but definitely worth the effort.
Since I usually draw financial inspiration from other blogs I wanted to highlight a couple different strategies for saving 50 percent of your income.
Saving One Spouse’s Income
One of the first blog posts I read about saving half your income came from Budgets Are Sexy.
In the post J$ talks about the power of saving such a large portion of your income and what you could do with the money saved, like pay down debt and invest in your future.
But the part I particularly liked was the idea of couples saving one spouse’s paycheck.
Even if you’re saving the lesser of the two paychecks this is an easy (ok not really easy) way to get started. Plus if you’re only living on one paycheck you won’t feel the devastation if a job loss or financial emergency occurs in the future.
Counting Debt Repayments as Savings
Kathleen at Frugal Portland started Operation Save 50% a while ago and her updates are fun to read. (Seriously, go check them out. I’ll wait.)
Saving half of your income is motivating – and even fun. What stops so many people from trying to save a large portion of money though, is that they’re in deep debt.
If you checked out Kathleen’s post you’ll see that she counts debt repayment as savings.
I think this a great method because 1) you’re slaying your debt and 2) you’re developing a habit that will stick with you even after you get into debt, which will translate into saving cash down the road.
My Savings Rate
Right now my savings rate isn’t anything to brag about. In fact over the past few months I feel like I’ve been hit with one thing after another financially and I’ve taken the easy route (spending more money) each and every time.
Right now my budget comes in at around $2080 – which includes around $480 worth of self-employment taxes. Since I freelance my income fluctuates but has averaged out at around $2,500 per month over the past three months.
If I were to stick to my budget and save my excess money my savings rate would be right around 16.5 percent. Not bad. Not great either.
There really is nothing I can cut from my budget – or at least nothing I’m willing to cut. So I need to earn more money.
If I don’t count taxes as part of my income/budget then I would need to earn $4,000 per month to save 50 percent of my income. Which is something I’m working on.
I’ll let you know how I’m doing here in a couple months.
What about you? Are you interested in trying to save half of your income?