How we save 40% of our income every month

Tara and I are very frugal, love saving and have always had goals for what we want to use our money for. There have been times in our marriage where we have saved well over 50% of our monthly income. We hope to continue to save 40% of our income every month, but understand that circumstance may not always allow that. We are also open to the idea of saving more every month, if our situation permits.

How do we save so much?

We don’t have payments. Right now we are 100% debt free and don’t plan on having any consumer debt ever again.

We trade convenience and luxury in the short-term for happiness and wealth in the long-term. We don’t feel the need to buy much, and when we do make purchases, we make sure to budget and save for those items first, THEN purchase them. Sometimes this takes creativity to find ways around certain things. For example, Tara and I have only had one car for more than 3 years now as we have saved for a car. In between those years, there’s been times I’ve had to ride a bike to work, carpool or get rides from other people.

We save first and then buy things second. We make this easy on ourselves by automating it. When we get paid at the beginning of ever month, money is taken out and put into our savings account, which takes away the temptation to spend the money on other things. It also takes away the chance that I might forget to deposit it (I’m a very forgetful person). We currently use an online savings account through Goldman Sachs called Marcus. We chose this account because of the 1.8% rate of return. I also contribute into my work 401k, which is withdrawn from my account every paycheck.

Why save so much?

Retire early. At our current rate, we can retire comfortably by age 49. At this point in my life, I don’t want to stop working, but I would like to not be completely reliant  on a job. Saving at a very high rate will give us those options in the future.

Having a steady savings rate allows us to pay cash for the things we want. Sure, it may take some time and patience to buy certain things, but it’s worth it to actually OWN what we buy.

Makes us aware of financial situation. When we are able to save before spending anything, it makes us more aware of our financial situation. We know that the money left over is what we have left to live off, which makes it easier to budget when everything else has been taken care of.

What you should do to save more

Decide what you want to save for. Having things in mind for what you want to save for helps motivate you to save. Whether it’s a fun trip or a new car, saving with a goal makes it much more feasible.

Decide on what percentage you want to save. Plan ahead in your budget meetings how much you can and want to save. For some people it may be a small number and that’s okay; any amount of saving is good! Remember that the higher percentage, the quicker you get to your goal.

This is how we save 40% of our income every month! We would love to hear what has helped you save. If you have any questions or comments, leave them below!