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How much you save on your income can have an incredible impact on how fast you reach your big financial goals. Learn how you can boost your savings rate while still having some fun now!

Why Your Savings Rate Matters

Last week we talked about three key numbers to track and master your money and one of them was your savings rate

How much you save on your income can have an incredible impact on how fast you reach your big financial goals.

Here’s the thing, though, unless you have a stash of cash under house or an inheritance coming up soon, that money is probably coming out of your budget.

So how do you become a super saver without deprivation? Can you boost your savings rate and still have some fun? 

I believe you can find that balance, but you need a plan and a system to set things up. 

This is why I’m glad Joe Mecca from Coastal Credit Union is back. He’s the quintessential saver and today he’s sharing how he’s grown his savings while still having some fun. 

In this episode, we’ll dig into:

  • Finding out your current savings rate
  • Tax advantaged ways to save more to give you a double win
  • path to notching up your savings 

Let’s get started!

[Simplify & Enjoy] Mid-Year Reviews: How to Keep tabs on your Investments Couple Money Podcast

It's June. The year is halfway over. Now is the perfect time to hit pause and do a midyear review to see how you're progressing with your goals and make sure that your accounts are moving in the right direction! Why Financial Reviews Matter While we automate much of our finances, especially the tedious parts. It really does pay to have these times where you sit down. In review the numbers. And having a financial checkup mid year is a fantastic opportunity. Not just to look at your day to day accounts, like your checking and savings but your investments. Having these more in-depth conversations. Can be beneficial to both your marriage and finances. For us, this is an opportunity to hit pause and to really sit down and talk. I don't know how this year has gone for you but it really has flown by for us. In overall, it has been good, but that doesn't mean there hasn't been some struggles and challenges that we face. Second, it gives us a chance to talk about what's been working and what's not working with our family finances. Life comes up and maybe we had to shift some things for a month or two. This is a pause where we can see. Is this a trend that we should start planning for, or is this. A one-time deal? Knowing that ahead of time can relieve the stress going forward. Finally, it's a great reminder to reflect on the big picture. What are we really working towards and how are we aligned towards that? And yes, it does involve looking at the finances, but also schedule wise work choices that we make. Time with the girls, all these things are connected to each other. Having a set period where we can reflect on that big picture is a huge help. This past year and a half can be especially challenging for families as we are navigating through this unprecedented time. Which is why I'm glad Kevin Matthews is a part of this episode. He's a former financial advisor and a number one bestselling author. He just had a new book from Burning the Blueprint that's out that you should definitely grab. Today, we're going to be talking about that connection between your family and financial goals and making sure that your investments are moving in the right direction. In this episode, we'll get into:  Community & Get Your Free Money Toolkit! Quickly & easily set your money up to hit your goals faster!  Join our community to get the free toolkit and newsletter! Get Instant Access We never share your information with third parties and will protect it in accordance with our Privacy Policy why investing matters and how you can come up with a plan that reflects your goals how to do a financial review for your investments? making sure that they're aligned with your priorities and goals. Are you ready? Let's get started! Resources to Stay on Top of Your Money  If you’re looking to build up your finances, here are some handy resources we mentioned in the episode plus more!  Best Budget and Money Apps: Personal Capital, Tiller, Mint Grow Your Stash Faster: High Yield Savings with CiT Bank Free 401(k) Analysis: blooom Jumpstart Your Marriage and Your Money From Burning to Blueprint: Rebuilding Black Wall Street After a Century of Silence Why Knowing Your Net Worth Matters Thank You to Our Sponsor Coastal! Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today. We’ve been Coastal members for a few years have been happy with their services. They have wonderful services and accounts to make saving easier including their competitive money market accounts! Slash Your Phone Bill with Republic Wireless! I'm so happy to announce our new sponsor Republic Wireless. If you’re looking to hit your family’s financial goals faster, optimizing your expenses is the way to go. Chances are you’re paying too much for your smartphone and not getting the value you deserve.   Same thing happened to me years ago. Wanting to become debt free faster, I switched to Republic Wireless and saved big time.  Nationwide coverage, fantastic phone options like the Samsung Galaxy and Moto g, plus seriously affordable prices (plans start at $15/month!) make it a smart choice for families looking to save without sacrificing value.  See all they have to offer at Republic Wireless!  Support the Podcast! Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it. Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share. Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts. Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together! Music Credit Our theme song is from Staircases. Additional music by various artists from Audiio.  
  1. [Simplify & Enjoy] Mid-Year Reviews: How to Keep tabs on your Investments
  2. [Simplify & Enjoy] Should We Invest in Bitcoin and Ethereum?
  3. [Simplify & Enjoy] How to Diversify Your Income
  4. [Simplify & Enjoy] 2021 Summer of Savings
  5. The Art of Being Frugal: How to Live Well While Spending Less

And if you’re interested in how families can save, please check out my interview with Justin from Root of Good. He and his wife were able to retire in their thirties while raising three kids!

Handy Tools to Increase Your Savings Rate

If you’re looking to get ahead with your finances as a family, here are key resources to check out!

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

They also have competitive rates on checking and savings accounts!

Key Takeaways on Growing Your Savings Rate

Before we wrap up, I want to focus on a few key takeaways I got from preparing this episode. 

  • Start as early as possible. Don’t worry about being about to sock away 20, 30, 40% of your income. Joe said it was closer to 3-5%, which is about where we began. 
  • Pay yourself first. Automating those transfers makes it easier on you and you’re more likely to stay on target. 
  • Minimize lifestyle inflation. Take any raises, bonuses, windfalls, or tax refunds and set aside a portion of that to go towards savings. You can still enjoy some fun now and save more, without  missing that money. 

If you want to discuss this more, please come chat with us on Facebook in the Thriving Families Group. We’re supportive. We’d love to see you there!

How much you save can have an incredible impact on how fast you reach your big financial goals. Learn how you can boost your savings rate while still having some fun now! #savings #fi #financialindependence #financialfreedom

How to Boost your Savings Rate

Elle Martinez: I think savings is such a foundational skill with your finances, no matter where you are in your financial journey.

Like you mentioned, emergency funds. That's one of the first steps to have to give you that stability to help you when things come up like right now, we're in the middle of a pandemic, but you know, even on a smaller scale have emergencies pop up, it's good to have that safety net.

savings can also be important as we move further through our financial journey. When we're talking about saving for goals, you know, whether it's vacations, maybe a house down payment, or, you know, you're saving up for starting a business or a family.

So I want to jump into that. Like how can we save more? first of all, let's talk about savings rate because I think this is a number that isn't discussed as much.

when we talk about savings rate, it's how much money do you have that you're putting directly towards saving, but you can get really nitty gritty on this. So, Joe, , how do you calculate your savings rate?

Joe Mecca: Oh, it's going to be a hot topic. I hope nobody goes and tries to look up savings rate on like, Reddit afterwards. Cause you'll get yeah, 150 different opinions .

So, I look at it. as simple division. That's how I look at it. I take, what did I save this year? And I look at it year over year. I actually break it out paycheck by paycheck, but. The big picture is year over year.

what did you save this year? And then divide that by what you could have saved. So what that ends up looking for me, he is, you know, taking my retirement account contributions. I take money that goes into investment accounts.

anything that goes into cash, anything that goes into a savings account and then divide that by after tax income.

it's your gross minus all your taxes. You're going to have to not count ,your spending towards your medical premiums or those kinds of things.

The other deductions that aren't taxes. Those are really. Spending. so it's like, okay. So what did you, what did you contribute toward your savings and then what could you have saved?

yeah, so I look at 401k contributions. I look at IRA contributions, anything that I put into my brokerage account.

I then look at both of my HSA account and my money market account. And I just look at the net change on the year. So where did I start in January? Where am I now? Because those are accounts that money is going in and out of. but I just want to see, you know what's the net on that.

Even though those are savings accounts. They're more short term. So even if I was contributing a certain amount every week or every pay period in the, either one of those accounts, at some point during the year, there is a little bit that gets backed out and gets spent. So, I look at the net change for the year and then take that total and then divide that by. Okay. What was my gross pay minus all my, all the taxes that I've paid already. and then come up with a percentage. yeah.

So I do that two ways. One, I look at the actual for the year. But then I said earlier, I do look at what it is, paycheck by paycheck. So that's kinda my target.

You know, I like automating one part, one part of the auto one numbers, part of the automation.

And one's the real number that you hit. So, yeah, I aim to save like 55, 60% of each check, but in reality, the end of the year, that's out to last year, I ended up about 40% savings rate. this year it's been about closer to 50 so far.

Elle Martinez: that's incredible. I think that that's fantastic that you have a system. I think that's important. wherever you are with savings to create a system, to make it automatic.

Automating it. makes such a huge difference. I don't think you started saving like 50, 60%. How did you build up to that number? That wasn't an overnight thing.

Joe Mecca: Not at all. I started closer to, you know, three or 5%. And I started, you know, when I was younger yeah. Was made it a point to, I'm going to contribute to my 401k plan. I'm going to make sure I get that match amount too.

and, Make sure I'm getting that every year. and then what I started to do is as, you get raises, as you get promotions and suddenly your incomes increasing, I've made it a point to first apply that difference into savings.

So, rather than have lifestyle inflation and suddenly it's like, I can spend more, if I was suddenly taking home an extra hundred dollars a pay period, I try to figure out a way to make 75 of that go to savings and 25 go to my spending. so it's, inflate the savings first, and then you can inflate the lifestyle later on.

Same thing as I've reduced expenses, you know, paying off student loans, paying off credit cards, paying off auto loans, those kinds of things.

As I've freed up that amount of money from them cashflow. I tried to apply it to savings first, rather than to spending.

and for me it's all been about, you know, , how do I get those ratios? I look at, well, you know, what, what am I, what am I saving versus what am I, what do I need to live off of?

trying to get that closer to the point where eventually it could be what I have saved up is what I could live off of for.

A period of time, hopefully forever it's just, as you find new sources of saving, be diligent about putting that into savings.

Elle Martinez: Yeah, I think you hit the nail on the head. AZ. Income increases, whether it's, you switching jobs , get a raise, or if you're paying down debt and now you don't have that debt to, yes, you'll have a little bit of a lifestyle increase. you don't have to live like a poor college kid, your entire adulthood,

you automate some of that and funnel that into savings is I think that's so important to kind of get into that habit. Cause you're not going to miss it.

if this is a raise, you haven't got it quite yet, but you funnel, whatever percentage you choose, you get the benefits. Yeah. We got a little bit more in our buffer, but now we also have much more or in our savings.

So I think that is absolutely key. And then, looking for opportunities, I think for us, when we paid off. Everything except for the mortgage. I mean, that's an extra 600 a month. It was crazy. We had the student loans, the car loan and credit cards. That's 600 now there's that temptation.

Oh my goodness. I have 600. I can blow it. Or you can say, extra 200 for us is great. 400 to savings and that just keeps cycling or whatever number you decide to go with. So that's a great point.

Joe Mecca: Something like that. It's easy to start small too.

Elle Martinez: Yeah.

Joe Mecca: like I said early on it was maybe three or 5% savings. Right. and as you know, as things improved, you can grow that if you, if you add a percent or two every year, suddenly you get places.

Elle Martinez: Yeah. And I think some employers are starting to offer that. Cause I had that happen to me at one job where you set up contributions and I'll ask you, do you want to increase it? Like after a year, do you want to automate that? And I thought, you know what, let me do it now because I probably will forget next year you get busy and , you put it off, but if you tell it, Hey, this year 5% next year, 6%, whatever it is you're starting at and growing it.

Makes sense. And then I know for me as, okay, this will show you how much of a nerd I am, but I called to get a better deal with internet. And if I save even $15 a month, doesn't sound like much, but throughout the year it adds up. I will immediately, as soon as I hang up that phone start increasing the transfer to savings by $15 a month.

That way it's not just me. Saving money, but actually I can see the money being moved into savings that I can use for the goals I'm really looking forward to.

Joe Mecca: I am in the same. Yeah, I've tried to cut out. Cause we talked about paying now loans, but just trying to cut out different expenses along the way, too.

I ended up canceling my cable. It was my biggest bill, and it just kept going up, but I wasn't getting the value out of it. I was mostly using the internet and watching streaming services.

So, I called up and said, Hey, you know, this is my biggest bill. You're charging me more than what your competitor offers for internet. if I compare the two, I'm better off just switching, and they didn't match it. They wouldn't match it. So I left

I'm going to switch to your competitor. And now I'm paying a third of what I was paying. A year ago. and I'm enjoying it a lot more.

I've got better service and, and I'm not missing all the TV channels. Yeah. I'm getting what I want off of streaming.

I'm spending more time watching online videos or just reading and, you think being at home, I'd watch more TV. I'm watching less.

A lot of that probably has to do with the fact that there's no sports right now, but. yeah. And then you could take that difference and then you could just apply that to savings.

So anytime I retool my spending, the first place I look is, Oh, we'll kind of put a little bit more into my savings account. yeah.

You have to find a lifestyle that you're comfortable with. And then a savings, right. That goes with it. And then, okay, well now figure out a way to fund that lifestyle for as long as possible, if it's not quite as luxurious as is some people then, so be it.

if you can get your savings rate way up and suddenly you can like, okay, well, if I live off of this percentage of that for a long, long period of time, that means I could spend a little bit more.

So now you can adjust your lifestyle up because you know, you're building to build a better, you know, to sustain a better lifestyle.

it's all about doing the math and getting comfortable with where you are and then having the discipline or the. Automation to a, I'm always going to go to automating. but having the ability to continue to feed that savings and, and building that up year over year, over year.

Elle Martinez: Yeah, and I think you're right. Savings really is about choices. moving your money to, you know, who and what matters most to you. And. There's different ways to save. Like you've mentioned a few different accounts, almost sound like ABCs with the, the HSA and everything, but I wanted to talk to you, you know, a lot of families, couples, they are saving for several goals.

You know, they want to go on a vacation. Maybe they're saving for a house in a few years, or they're thinking of starting a business.

What are some. Different account options that they should consider? What are the differences, for example, like a regular savings account versus a money market account or a CD?

Joe Mecca: let's talk specifically about savings and then we'll put the retirement and longterm investment stuff aside, but for short term savings or near term savings, you're going to want money that you're going to have access to. It's gotta be liquid.

so your options really are you can put it in a savings account, a high yield checking account, which is you a checking account that actually pays, pays you a dividend.

you can put it in a money market account, which, Yeah, it really is, is an enhanced savings account. And you're gonna earn a little bit more, interest off of a savings or than you will on a regular savings account. May have some other restrictions around it, but generally they're largely the same as a savings account.

or you can put it into a certificate account where you're locking up that money for a period of time, in exchange for a better rate.

the beauty of all of those are your rate of return is going to be guaranteed. It's going to be part of your agreement.

unlike an investment account where you're in the market and you're subject to things going up or down with time and having the potential to lose your investment. You're not going to have that with a savings account.

You're not gonna earn quite as much when on the rate as you could in a good market, but you don't run the risk of losing that money either, which makes it ideal for the short term.

Elle Martinez: Yeah. I think that's perfect too. Talking about your goal timeline. if you are wanting a down payment for a house, you want to make sure that that money that you put in is in there. You don't want to take your chances.

Sure. It could double, or it could drop. I know this year, just the way it timed out we opened a brokerage account. we were putting money in, and this has been a roller coaster year. April was it's a little bit painful, but you know, thankfully, you know, we're thinking more longterm, so it did bounce back.

But if you're looking short term for that, That money. You don't want to have that volatility. You want to have that stability and then enhancing your savings. Like you mentioned, with accounts like money market or a certificate of deposit, at least, you know, that you're earning a little bit more .

Joe Mecca: And you're going to have access when you need it. So anything under, if you know, you're going to need that money inside of, let's say. Five years. You're probably going to want to go with, with a savings or savings type account, versus, you know, longer term investment where you, you don't know what's going to happen.

You don't know what's gonna happen longterm either, but you know, in the longterm things tend to trend a little bit more positive.

Elle Martinez: Yeah. for example, when we talk about investing every year, it could be very volatile, but if you look at the longterm trend, it does increase. So , identifying about what the time range is for your goals can allow you to find. The right account for your money and your savings.

About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..