I live on 50% of my income. No, I don’t live in a cardboard box or make a six-figure salary. My salary is fairly average. According to the Social Security Administration, I actually earn slightly less than average. My earnings are ordinary and my lifestyle is as well. (Although I consider it to be quite luxurious!) In other words, any ordinary American can squirrel away half their income. The key to living on 50% of your income is simple: ignore societal norms.
I don’t own a car. Instead of driving, I bike, Uber and snag rides with friends and family. My co-workers think I’m insane and that’s okay because I’ve made a conscious decision to go against societal norms. (One of my coworkers was shocked enough to ask, “Taylor, are you not getting paid enough? This is horrible!”)
The truth is that I can afford to buy a car, but car ownership is not a priority for me. To put it simply, a car wouldn’t increase my quality of life enough to justify the cost. Deciding what the priorities are for you or your family is a deeply personal choice that will likely vary from person to person and even change as you journey through life. The only rule for saving half your income is that everything cannot be a classified as a “priority.” Some things must be cut and others can stay.
For example, even though I don’t own a car, I pay a lot in rent…$900 per month. After living with two roommates in a one-bedroom apartment, I’ve learned that housing is one of my top priorities. I will gladly pay extra for a safer neighborhood or slightly better interior. (For me, “better interior” means clean and spacious, not stainless steel and massive.)
The Nitty Gritty: My Monthly Expenses
Okay, enough philosophy. Here’s the breakdown of my monthly expenses:
You probably noticed that a few standard expenses are missing. My monthly cell phone bill is paid for my father. (In case you’re worried I get free parental handouts, don’t be.) For health insurance, I pay $30/month for my company plan. It’s deducted from my paycheck before I ever see it.
As for my “extra” category, some people say “entertainment” categories cause wastefulness and others think that the budget for “extra” should be $0. For me, the answer is simple. I don’t believe in financial extremes. I don’t believe in financial purging or binging, so I keep my “extra” category and spend the money as I see fit, without guilt.
Sometimes I spend it all, like during October when I went jet-skiing for my sister’s birthday, had a fun night at Knott’s Scary Farm, threw a frugally awesome Halloween party and got a jump start on Christmas presents. Other months, I barely touch it.
How to Start Saving 50% Today
If I can save half my income, then you can too. (Seriously, you can do this!) Instead of adhering to the myth that “more is better,” step away from the bombardment of advertising and societal pressure and create a game plan.
1. Establish Your Priorities
Where can you cut back? Housing? Cars? Commute? Groceries? Once you’ve established where you can cut back, decide what you are willing to go without. Perhaps you don’t mind living with roommates or renting out your spare room, but having a car is nonnegotiable. Those are your priorities and it’s time to scale back accordingly.
2. Exploit Your Good Fortunate
My dad pays for my cell phone bill. Sure, it’s only $50/month, but over the course of 10 years, he’ll have saved me $7,200, which is pretty awesome. Chances are that you have financial freebies in your life as well. Perhaps your parents offered to let you live at home for the small fee of monthly groceries, or maybe your partner has a car they’re willing to share. Often, financial gifts come in the form of employer benefits like 401(k) matching programs, HSA accounts or even free food. Regardless of the details, be thankful for financial gifts, and more importantly, use the crap out of them!
3. Change Your Mindset
The saying might be cliché, but it’s also true. Making big changes and going against societal norms is hard and often uncomfortable. I would be lying if I said I always enjoyed my 6-mile hill-filled bike ride to work. The truth is, I often hate it. My clothes get drenched in sweat, drivers can be rude, and I was scared of getting mowed down by cars when I first started.* But by choosing to go against the sacred American “truth” that cars are necessary, I’ve changed my belief about what I’m capable of accomplishing and carried on despite my initial discomfort or fear. You can too.
4. Say a Big “F-You” to What People Think
Living on 50% of you income is not normal, and is definitely not common. As a result, you’ll probably partake in other behavior that is considered “abnormal” as well. Whether that behavior involves owning a small wardrobe, riding a rusty bike or having four roommates, there will be people who think you are weird. Don’t let it bother you. In fact, you should take it as a sign that you are doing something right. Saving 50% (or more!) of your income means that you are different than most people, and that’s a good thing. Be proud of your “weirdness” and wear it like a badge of honor.
Do you save 50% (or more) of your income? Do you want to? Any tips for making it work?
* In case you got the wrong impression of biking, there are also evenings rides in which I watch gorgeous sunsets and feel ridiculously strong after making it to the top of a hill. Biking can be awesome too.