I know what you’re thinking: damn girl, that’s a high savings rate! Let me state the obvious, so I can mitigate the claims of clickbait: I did in fact save 72% of my income.
BUT I live a very specific lifestyle. Not everyone can do or will choose to do what I did, and not everyone has the same opportunities available to them that I did. This is not me calling for everyone to live this way; this is me sharing my story.
Exactly How I Saved 72% of My Middle Class Income
Developing a savings habit is one of the best financial moves you can make. It’s a habit I developed as a child, and one that has been sharpened in the last four years of my life. And of course, the more you can save, the better off you’ll be long term.
Deciding that you want to hit a specific savings goal, and working backwards on how to hit that, is my number one suggestion for how to boost your savings rate. We’ve got a goal setting worksheet to help you flesh out your specific goal, so you know exactly what you’re working towards. It’s what I use to hit my 72% savings rate!
How Did You Save 72%???
No, that’s not a typo, no, I’m not secretly earning hundreds of thousands of dollars, and no, no one supports me. I made less than $70,000 in 2018, and I saved 72% of my gross income. Let’s dive in, shall we?
Spoiler: I Budget
The first step to 72% savings is budgeting. I budget like whoa. I love budgeting. Budgeting is life. Budgeting forever.
I sit down at the beginning of each month and make a budget for that *specific* month. Because some months I’m buying gifts or traveling and other months I’m not. Then I track my spending throughout the month and at the end of the month, I tally my totals.
Budgeting is really simple once you make a budget that works FOR YOU. Each of us have different lifestyles and incomes and needs, so I am a fan of values based budgeting. It allows you to build a budget that works for you, rather than trying to copy someone else’s spending pattern.
My Frugal Lifestyle
Let me say it again; my lifestyle is not applicable to everyone’s. This is not some copy and paste ish to be dropped into your own life.
I am naturally a pretty frugal person, and years of being very low income have honed my frugal lifestyle skills. I also live in somewhat affordable city (depending on where you come from), don’t have any dependents, and don’t own any property.
Housing and Utilities
I lived with my boyfriend and another roommate for the majority of 2018. I lived alone with my boyfriend for the first 4 months of 2018, where we each paid $550 in rent. Rent actually went up to $585 each when we moved in with a roommate, but we have significantly more space.
Our roommate pays a little more in rent each month since she has the master bedroom, which augments my rent payments. We split all utilities 3 ways equally, which is hugely helpful. In the summer (in Texas), we don’t put the AC lower than 78, and in the winter we don’t put the heat higher than 68.
I spent the last five years working part time for a catering company while I built Bravely. No shame in that side hustle game over here! Working for a food service company has one huge benefit: leftovers. I religiously brought home leftover food from events. This meant I had months where I spent $100 or less on food at the grocery store.
My boyfriend and I are also very basic food people; we eat a lot of pasta and veggies, veggie chili, and soup. We don’t eat out often, and when we do it’s usually places that cost $30 for both of us. Additionally, we don’t buy meat, we don’t buy a lot of dairy products, and recently we started making our own pasta sauce and bread.
I own my car outright (which was a gift from my grandparents 7 years ago; I’ve never had a car payment. Privilege strikes again!) I pay roughly $700 a year in car insurance. I work from home, so no commute, and I bike a lot. My gas costs each month are roughly $25. I usually get my oil changed once a year because I drive so infrequently. As of this writing, I haven’t driven my car in the last three days.
More on living that frugal lifestyle:
My Savings Habits
I am an excellent saver. Like, really, really good about it. It’s important to me, because I was so broke for so long. Savings are my buffer between moving forward with my financial life, and falling back into the sad hole I was in when I was 26.
So I prioritize paying myself each month. I pay my bills, and then I pay myself. I save 25-30% of each paycheck for taxes, since ya girl is self employed. After that, I parcel out my savings depending on which financial goal I’m working towards at the moment. For example, in the early part of each year, I always save towards my IRA over other goals. I like to max out my IRA by April of each year.
The combination of a frugal lifestyle, certain privileges, and a dedicated savings plan is what makes me able to reach a bonkers high savings rate on a middle class income. I also practice values based budgeting like a god damn ninja. I have my spending down to an art- what matters to me is where my money goes. It almost never goes anywhere I don’t want it to.
More on handling those freelance dollars:
But That’s Not Me!
If you’re feeling like my story is hella unrelatable, don’t worry. I asked some other middle income earners for their tips on achieving a high savings rate.
“I hit a 59% savings rate last year by maxing out my 457 for the first time, doing a split between traditional and Roth IRAs, paying extra towards my mortgage, and putting extra cash into a high-yield online savings account for 2% or higher risk-free returns (yes, I’m aware that it’s maybe/barely keeping pace with inflation.)” Josh from joshovermyer.com
“Prepaid cell phone. Single with no kids. Sensible, reliable car (2007 Toyota Corolla). Not taking out loans. Cutting Cable (Sling TV, FireStick, Netflix).” Anonymous
More on saving like a boss: