How much of your income do you save? Do you think you could start saving at least 10% of it immediately? There are plenty of extreme savers these days who are putting away 35%, 50%, and even 60% of their take home pay. These people really know how to save by living below their means. You may think that people who save half of their checks are depriving themselves of living a good life, but that isn’t necessarily the case.
As a way to build more passive income streams, I have a goal to start saving 10% more of my income over the next couple of months. My wife and I currently save about 12% of our monthly check to put into our kids 529 plans. That is currently the extent of our savings with the rest of our income going to pay the monthly bills.
Here is our plan of how to save another 10% of our income that can be put to good use earning money for us.
- Set Some Goals – The first step in our goal to save an additional 10% of our income is to set some goals. I need to know how many dollars will make up the savings ($400 per month) and when we plan to accomplish this by (end of October). With these simple goals in place, we can move on to the next step of tracking each expense that we incur.
- Track Your Spending – I have always had a habit of looking at our monthly credit card bills and bank statements to make sure we were living within our means. However, it wasn’t until just recently that I started to critique each expenditure down to the cent. If you don’t currently track your spending, I suggest you start. I found it an extremely powerful tool to help me cut down on our spending.
- Find Simple Ways to Save Money – There are tons of simple ways to save money. From making your own coffee to turning up that thermostat in the summer, there are dollar savings around every expense in your budget. I hope to find a couple simple ways to save money starting out on our goal of holding on to another $400 per month.
- Staying Motivated – Once we have started to save money from our monthly budget, it is important to keep the momentum. We need to make sure we continue to follow through on our goals and not revert back a month or two later. As long as we can keep our motivation up, I don’t think we will have much of a problem meeting these goals.
Final Thoughts
Our goal to save another 10% looks tiny compared to other families saving over 50% of their income. Once we have met this goal, then we can set another one to save another 10% or some other figure. Setting manageable goals that can be attained will allow us to stay motivated and not give up. It will also allow us to gradually change our spending habits one small step at a time, which will help us hit our long term goal of becoming financially independent.
How much of your income do you currently save?
Related posts:
- Cutting Out Wasted Expenses to Save More Income
- Effective Ways to Save
- Cutting out Snacks to Save Money
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Love these posts that motivate me to save more money each month. I’ve been stuck in a rut with savings and contribute to my 401k and ira each month. I do need to think about finding another savings source as we are expecting baby #3 in the next few weeks.
@Scott – Thanks, I appreciate that. Good luck on baby #3. I know having two is a big expense and couldn’t imagine a third. Best of luck.
Hmmm, I hope people are saving at least 10% of their income after maxing out their 401Ks and IRAs!
Great post! I’ve been too focused on trying to increase our saving percentage to 50%; it’s a much better idea to set interim targets..thank you
@Laura – Thanks, I appreciate that. There is no feasible way we could save 50% of our income now. I would love to, but it just wouldn’t be possible in such a short time. 10% seems to be manageable and a nice place to start.