Saving 50% of your income doesn’t sound bad. What if we told you it could be done with just a few changes in your day-to-day life?
Well, have no fear!
We're here to show you how to save more than half of your income (yes, it’s possible). Keep reading for our tips and tricks!
How to Save More Than Half of Your Income?
A lot of people went from having almost no money savings to becoming millionaires in their mid-30s. There are actually quite a few ways you can achieve this, so let's take a look.
Track Your Spending
The most important factor in saving more than half of your income is ensuring that your spending aligns with your values. For example, if you value experiences over material possessions, you're likely to spend less overall.
One simple way to do this is to track your spending for a month and see where most of your money goes. Afterward, you can start making adjustments to ensure that your spending reflects your priorities.
Make a note of everything you buy, whether it's on your phone, in a spreadsheet, notebook, or app.
Boost Your Income
There are numerous ways to develop multiple streams of income. You could start a side hustle, generate passive income, or take on a high-paying side job. No matter what plan you choose, the key is to make sure that your extra income is going towards your savings goals.
A study carried out by Gallup metrics has determined that the median annual household income worldwide is only $9,733.
Trim Unimportant Expenses
If you want to save money, you can reduce your expenses for "the big three" items: housing, food, and transportation. Housing is likely to account for a significant portion of your income. If you can figure out how to reduce your housing costs, you'll save a lot of money that you may use to invest or save.
One simple strategy is to examine your monthly spending and look for opportunities to cut back. For example, you could try meal planning or cooking at home more often, using public transportation instead of a car, or looking for ways to lower your utility bills.
Challenge Yourself to Do More Saving
Consider setting a specific goal, like saving 50% of your income or putting away a certain amount each month. Try starting a savings challenge, such as a 52-week money challenge, to help you stay motivated and meet your financial goals faster. You can also use a debt snowball method to get rid of your debts.
In addition, you may want to enlist the help of other people in your life, like friends or family members, who are also trying to save more of their income. Whether through accountability partners or online communities, having a support network can make it easier to achieve your goals and stick with them over time. With these strategies in place, you'll be well on your way to saving more than half of your income.
Automate Your Savings
Another key strategy for saving more than half of your income is to automate your savings. It means setting up automatic contributions to a retirement account or other investment account so that you don't have to think about it. This can help you make sure that your savings are always a priority, even when life gets busy or unexpected expenses come up.
Plan What to Do With Your Savings
Once you've started saving, it's important to plan what to do with that money. After all, simply saving money isn't enough; you also need to ensure that the time you spend saving will benefit you in some way in the near future.
One option is to invest your money so that it can grow over time. This could include investing in stocks, mutual funds, or exchange-traded funds. Another option is to use your savings to pay off debt, such as high-interest credit card debt or student loans. By paying off debt, you'll save money on interest payments and be able to keep more of your money for yourself.
How Much of My Income Should I Save?
This question doesn't have a definitive answer, but there are some general guidelines you can follow.
One popular guideline is the 50/30/20 rule. This rule suggests that you should allocate 50% of your income to essential expenses (such as rent, utilities, food, etc.), 30% to discretionary spending (on things like entertainment, travel, etc.), and 20% to savings.
If you're trying to save for a specific goal, like a down payment on a house or retirement, you may want to save more than 20%. On the other hand, if you're already debt-free and have a solid financial foundation, you may be able to save less.
The important thing is to start saving something. Even if you can only save a small percentage of your income, it's better than nothing. And as your financial situation improves, you can always increase your savings rate.
Read more: How to Calculate Your Gross Monthly Income.
Bottom Line
Congratulations!
You’ve made it to the end of our guide on how to save more than half of your income. We hope you’re feeling motivated and inspired to start saving for your future.
Make sure to think of a game plan and stick to it because consistency is everything when it comes to saving money.
