The typical American family holds $4,830 in their savings account – not impressive, but not a lost cause either. Financial gurus suggest setting aside at least 10% of your paycheck, but imagine if you could save more? An article I recently came across talked about a man who paid off his mortgage in advance by saving 70% of his earnings. Aiming for financial freedom, he believed in the potency of high savings.
Does 70% savings seem excessive? If you’re curious about achieving such a lofty savings goal without feeling the pinch too strongly, perhaps a strategic approach could help. Let’s delve into some tactics to help you save 70% of your income without feeling deprived.
1. RECONSIDER YOUR LIVING SITUATION:
Housing often accounts for the heftiest monthly expense. Conventionally, it’s advisable to limit monthly housing expenditure to less than 30% of your net income. If you’re looking to put away 70% of your income, this implies you have to live on the remaining 30%. Needless to say, it’s not feasible to spend this entire 30% on housing. To make ends meet, you should aim to spend around 5% (10% at most) of your income on housing.
Take a look at options like moving into a more compact place, renting out extra rooms in your home, or seeking roommates. Some go as far as living in an RV, renting a studio, or offering to maintain a property for decreased rent.
Furthermore, saving money on housing doesn’t mean renouncing a decent living. It’s feasible to invest in a double-house and rent out the other half, thereby reducing expenses while still maintaining your privacy.
2. FIND AFFORDABLE TRANSPORTATION METHODS:
Car ownership and upkeep may be another aspect to consider for savings. If you own two cars, consider switching to a single vehicle. It might seem challenging, but effective communication can help make the transition smoother and halve the costs of maintenance, fuel, and insurance.
Public transit, cycling, walking, or even considering a scooter instead of a car could not only be cost-effective but health-enhancing as well.
3. EMBRACE DO-IT-YOURSELF (DIY) TASKS:
To save 70% of your income, consider dismissing apps like Instacart and Amazon Grocery. Plan your grocery shopping meticulously and allot specific time slots for it. Cultivating the habit of cooking most of your meals at home could further add to your savings.
Additionally, adopting DIY for tasks like cleaning, general repairs, basic landscaping, etc. can also be financially beneficial. Even though it might seem time-intense initially, learning certain skills could save you ample spending in the long run.
4. LIVE IN AN AFFORDABLE AREA:
Your geographical location plays a significant role in your savings journey. Living in a bustling metropolis like Los Angeles compared to a quieter town in Nebraska presents different financial challenges and opportunities. Be it groceries, transport, childcare, or other services – your location heavily influences the cost of living.
5. STRIVE TO INCREASE YOUR INCOME:
One essential point to consider for this ambitious 70% savings goal is your earnings. The goal becomes increasingly challenging if your income is not sufficient. Earning in six figures could make this substantial saving goal more comfortable and feasible. It doesn’t necessarily require you to be a high-profile professional like a doctor or lawyer, but it would be helpful to constantly seek ways to boost your income.
To sum up, aiming to save 70% of your earnings might seem audacious at first, but with the right strategies, it’s not impossible. Tackle this goal gradually, keep at it, and watch your bank balance flourish while getting you closer to financial independence.
