How to Double Your Savings Rate
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Today we’re looking at how you can double your savings rate while still enjoying this summer!
Double Your Savings (and Still Have a Life)!
This week in the community newsletter I asked a question – can you really save half your income?
Think about that for a second.
Why is this important?
Whether you’re paying off debt, saving up to buy a house, start family, travel, or invest more for your future – all of these goals have something in common.
They need money.
How much you save of your income can have an incredible impact on how fast you reach your big financial goals.
Now unless you have a stash of cash under in house or an inheritance, that money is probably coming out of your budget.
Now another quick question – do you know the average savings rate in the U.S. now?
Take a guess.
It’s around 6%.
As you probably guess that’s not going to cut it if you want to knock out any of those big goals soon.
There’s no way around it. If you want to hot those goals fairly quickly, you have to master the art of saving.
But half your income?
That’s a bit much, right?
Don’t let anyone tell that’s not a huge deal because it is.
However, it is possible to start working on bumping up that savings rate and one of my goals this summer is getting you to double yours.
We’re bringing back the summer of savings.
I want this summer to be your best ever. Today on the podcast and throughout the season on this site, I’ll be sharing strategies to help you grow your stash while still enjoying things.
In this episode we’ll discuss:
- A simple path to notching up your savings rate
- Psychological hacks to save more
- Tools that will make your life much easier
Oh and stay tuned until because we’re also bringing back the summer of savings giveaway!
Hope you enjoy!
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If you want to hear about families who are big savers, 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!
- Best Budget and Money Apps: Personal Capital, Tiller, Mint, Zeta
- Grow Your Stash Faster: High Yield Savings with CiT Bank
- Manage Your 401(k) Easily: blooom
- Automatic Saving: Qapital
- Jumpstart Your Marriage and Your Money
- Simplify and Enjoy: Financial Freedom for Families
- 5 Days to $5K Course
- How to Achieve Financial Independence Through Big Wins
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 have competitive rates on checking and savings accounts!
The Art of Saving More
When you're dealing with this big goal – doubling your savings rate, for some of you might want to try to save half your income – I have some good news and some bad news.
The bad news is there's no secret formula to doubling your savings rate.
The good news is there's no secret formula to doubling your savings rate.
There is a process that you can use that couples have use to save significant amounts of their money.
And we've had quite a few guests share how they did that.
We've had Matt and his wife were from Chicago. They saved more than half their income.
Jamila and her husband live in New York City a very expensive town for many. And they were able to save over $80,000 dollars in a year!
There is a process that helps that works and it does take effort, but it's something that you can do and you can adjust according to your goals and your personalities.
So here it is in five steps.
- Figure out your key numbers
- Find ways to optimize your expenses while still living like a regular person
- Find ways to make more money
- Make your money work as hard as you do
- Automate your system
Now we're gonna go and break each of these steps down, but if you've been listening to the podcast you probably already know what I'm going to say next.
Before we get into the how whether it's optimizing expenses or trying to earn more, the two of you really need to focus and nail down your why.
Why are you trying to save half of your income or doubling your savings rate? What do you two want to do with that money?
The reason I want you to be clear on is because even though this process is straightforward and on paper it is simple it is not easy.
You're going to be making choices that yes will bring you closer to your goals. But it's probably going to be different than a lot of your friends.
You may have friends that are constantly eating out or taking care of these expenses that you no longer have. And it feels weird being different and sometimes it is discouraging you feel like you're the only people doing this plan but you're not alone.
And it is for something so when you nail down your why, then it's easier to follow through on the how.
Finding Your Key Numbers
The first step in this process is finding your numbers. You have to start somewhere.
You can't double your savings rate, you can't save half your income unless you know exactly what you're taking home and then exactly how much are you saving now.
And there are plenty of ways you can do this. There are actually some fantastic apps many of them free some of them very low costs that will pull the numbers for you.
A few of my favorites right now are Personal Capital, Tiller, Mint and Zeta.
So it takes about I'd say 20 minutes to set this up but what's great is once it's set up you're done.
You can easily log in and get a quick snapshot of what's coming in what you're spending on and how much you're saving.
Once you have those numbers, you can set a goal for your savings rate. And this honestly is going to be different for each of us.
Where are we currently? Where do we want to go what are our goals?
If you are not a saver naturally start off small see what you can do with 5 percent notched up to 10 percent.
Many financial planners that I've talked to say at a minimum you should be saving 15 percent of your income.
Now if you have huge goals like financial independence and freedom you're definitely going to have to kick that up to 30 40 even 50 percent. But wherever you are, start there and then increase and notch it up.
Optimizing Your Bills
So then the next step is finding ways to cut your expenses. And really it's about optimizing I don't like to use the word slashing or cutting expenses but I think people are familiar with that.
The goal is to optimize your expenses while living like a regular person.
And there are two big things I want to talk about. The first one is when you're talking about the art of saving and you're looking for how you're going to spend your time and what bills to go for one.
I want you to focus on the big ones. I want you to look at the big expenses that are eating a ton of your money.
Now for most families, the three biggest expenses are:
- transportation and
So I will say the first two are really big wins but at the same time the really big changes and depending on the timing you might not immediately be able to save.
I'm actually going to have separate episodes for this. I have an upcoming episode about buying a house and finding those hidden gems.
I also have an interview that's going to be coming up on our YouTube channel from a rental expert about how to negotiate when it's time to renew your lease and how to hunt for the best apartment deals.
So I'm gonna put a pin on those and push them to the side because they deserve their own episodes.
So let's tackle some expenses that you can work on this month and we'll start off with food.
Stress Free Ways to Save on Eating Out
While we all need to have groceries to feed ourselves. The number one problem I see with couples having on their food bill is that they pay a premium for convenience.
Not only is that expensive but can be bad for our health.
So here are four stress-free ways to slash your food bill.
First one is planning your meals for the week. Now if you love planning in detail go for it. But for most couples, I talked to that's just not going to work and you don't have to have a very detailed meal plan. You just have to have a list of what you're planning to have each day. Do you want tacos? Do you want pizza? Are you looking for a stir fry? A salad?
Whatever it is. Jot that down. That's going to help you because when you go grocery shopping you have that list in front of you and you're not tempted by whatever's on display thinking Oh that'd be a great meal because making the decision at the grocery store usually means that you're paying more.
A second step is to go ahead and prep a meal or two. Now sounds like I'm asking you do work but I'm not.
Actually, this is something simple that you can do if you have a pressure or a slow cooker you can actually make some meals while you're relaxing during the weekend or you know at home taking care of some things.
Dishes like Chili's are easy to make stews. You can put that in the crockpot pastas pot roast stuffed peppers whatever you want.
This is something that's simple that once it's done you can put it in the freezer as a quick go to meal.
The third key to making this work is going international with your flavors and your dishes.
I know we all have comfort foods things we grew up with and we know and love to eat. However you can have some incredible meals on the cheap the same stuff that you get at restaurants by looking at different cuisines that are out there a few years ago.
I chatted with early retiree Justin from Root of Good and he told me about some great dishes that you can do by going Thai.
Once you have these ingredients and you've gone grocery shopping and you know the basics of the recipes it is so easy to prepare them. He actually described it as Hamburger Helper easy so go beyond what you usually like to eat and make sure that you explore your options.
Finally accept that you're going to have those days. You know what. We all have nights where we come home we're absolutely tired we don't want to cook. We just want something made.
Go ahead pull out either the crockpot dish that you had made and that's in the freezer or even get frozen pizzas as a stock up for your freezer for those nights.
It's okay. Yes, it would be better to do homemade meals all the time from scratch. But you know what? Let's not let perfect be the enemy of good.
Getting Better Deals with Recurring Bills
Some other areas in your budget I want you to look at is those reoccurring expenses because when you negotiate a better deal you're saving month by month.
I'm talking about things like your cable and your internet. They love to advertise the bundle deal but have you really run the numbers and see what's the best option for you.
We were able to save about half of our cable and internet bill by dropping the cable and having options like Netflix and Hulu.
Save Big on Your Smartphones
Another area to look at are your cell phones. Nope, I'm not telling you to give it up.
I love my smartphone. It's an incredible tool that I use every day. I don't however want to pay a premium for it.
There are some fantastic alternatives to the big carriers some popular ones that should check out Republic Wireless, Ting and Google Fi.
They're going to give you the service and the phones you love without the high price tag.
And if you're not a big smartphone user or maybe you want to get something for the kids but you don't want to pay a ton of money for that extra line FreedomPop has some incredible deals too.
Negotiate Your Insurance
This next category of bills this is something that we do about once a year we check it's not exciting but we have been able to save considerable amounts of money.
I had one year where I saved a thousand dollars. Do you know what this was?
It's our insurance our car insurance and our home insurance. Doesn't sound like an exciting afternoon. And to be honest it isn't but it really doesn't take long for you to save some big bucks.
We've been able to knock down our premiums by half sometimes when we have switched providers. And once you get into this and this is your schedule you do once a year.
This is something that will pay you back if you save even 50 dollars a month. That is an extra six hundred dollars in your pocket.
Saving on Kids' Clothing
If your parents I just want to mention that kids clothes can be their own expense. And if your little ones are like ours I mean they're growing like weeds.
Chances are that you might have a chunk of your monthly budget just constantly going towards keeping them dressed in clothes that fit.
If you're looking for a simple and easy way to shop that's pretty fast almost as easy as Amazon, try ThreadUp.
It's a consignment store that's online. You can find high-quality clothes for your kids at ridiculously low prices. And if you already have an Amazon account you can use that to pay for it.
We love it. We use it. We have a seven-year-old and a four-year-old. And so they are always going through clothes. This has definitely saved us a ton of money.
Earn More Money
The next step of the process is finding ways to make more money.
Optimizing your expenses is crucial to make sure that you're getting a good deal. But it's only part of the process.
Making more money absolutely can help you reach your financial goals quicker.
Now I know on the Internet they love to talk about side hustles and they are fantastic with boosting your income trying something different and working around your schedule but that's not your only option.
It is more work and if you're like us negotiations sometimes seems difficult but it's absolutely important that you get better at negotiating with your current job.
You want to make sure that you're getting a competitive salary and sometimes that means switching companies switching positions and years down the line it might mean moving to get a better job offer.
This is something that won't be taken care of right away. But I want to mention it because this has been a common thread with a lot of people that have saved significant amounts of money.
I'm talking closer towards half the income is because they were able to increase their income without increasing their lifestyle.
And yes they're 9 to 5. They were able to find either a better company that fit them or a better position that worked for them.
So it'll take time and research but you want to make sure that you prepare ahead of time so you can present your case.
Show what value your adding to the company and make sure you're getting the corresponding pay.
Get a Better Savings Account
The next step in this process is making sure that your money is working as hard as you do.
This is important because when you are stashing away that money you do not want to have your bank nickel and diming you getting fees because you're not having a minimum or they're just not giving you an interest rate that's earning you anything.
So find a bank or credit union that has competitive rates and of course we have Coastal Credit Union as a sponsor that's definitely an option.
If you're local here in the Raleigh area please check them out but I want you to just shop around make sure that your banking options are working for you.
Automate Your Savings
And then finally the set it and forget it automating your system. I cannot say this enough this is very important because many of us are just busy we're taking care of everything. And it is easy to forget to make those transfers.
One of the best pieces of advice I can give you is automating as much as you can.
If you decide that you guys can save an extra 100 a paycheck a month or if you can save 500 a month or whatever number you choose.
Treat it like a bill and schedule it. Make sure you're paying yourself first.
Find a Community to Support You and Your Savings Goals
And that's it.
It is a process but this process has helped couples save much more money than they were before.
Depending on your situation you may hone in on certain areas more than others. Maybe you find that cutting expenses. That's kind of the low hanging fruit.
The big win that you can get now or some of you may find that earning extra money whether it's negotiating with your job or doing some side hassles even temporarily. That gives you the winds that you need. Again the process on paper seems simple but it's not always easy.
Something that's helped us and this might help you as well is having a community.
Yes, the two of you having those regular money dates keeping each other accountable is helpful but then also getting in contact with others in your area or even online to motivate you.
Being with a similarly focused tribe can encourage you to swap stories about what works for them and what doesn't that can help you stay motivated and make sure that you make your savings goals.
Key Takeaways on Increasing Your Savings Rate
Before we close up I want to focus on some key takeaways I got when researching for this episode:
- Make it a game and have rewards.
- Create a Fun Fund.
If you’d like to chat more about saving more, please join us in our private and free Facebook group – Thriving Families.
We’re families looking to support and help one another out. Hope to see you there!
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Like the music in this episode? Our theme song is by Gentle Regime. Additional music by Lee Rosevere.