All over the interwebs, I see posts about people saving 10, 20, 45% of their income. So far I’ve been unimpressed (insert face of grumpy cat here 😉 ) so I decided to write about my 85% savings rate. I’ve been waiting to write about this because the negative part of me kept thinking, “No one else is saving 85% so it’s probably unsustainable. Don’t write about something you can’t keep with long-term.” But I’ve been saving 85% or more of my income… forever. So, I figure forever is a pretty good term so it’s safe to say saving 85% is plenty doable.
By the way, I calculated this savings rate using after-tax dollars.
Saving 85% was never my goal. My goal for years has been to spend as little as possible while being happy with life. It just so penciled out that I can be very happy, while saving 85% of my dollars. Who knew?
I’ve never been much for a written budget, but I’ve looked over tons of receipts to lay out my average cash flow so you so you can get an idea of how I spend that 15%.
Sounds crazy, I’m sure. Hopefully this high number makes you encouraged to save more. Seriously, I know 85% is high compared with more spendy people but it’s attainable for myself at my age. Your situation may vary slightly.
Fun Fact: I don’t make that much money. Although I haven’t disclosed my net worth spreadsheet on this blog, (should I?) you should know that I make a decent salary for someone a few years out of school. Nothing spectacular though. I have about 8 other streams of income outside my full-time job but most are minimal.
Where the 85% Goes…
60% of my income I never see. 50% goes straight into my employer-matched 401(k) Vanguard to buy up an assortment of index funds. 10% goes into my employer’s ESPP plan. Boom. 60% saved without hardly doing anything but ticking a couple boxes on my company’s intranet.
I max out my Roth IRA each year ASAP. The max is $5,500. This goes into Vanguard as well.
After the Roth 401(k), ESPP, and Roth IRA, I put the rest in a taxable investment account. This is last resort, as I wish I had more shelters for my money but I DO NOT. I’ve researched a ton and can’t find anymore ways to get my money into a tax sheltered environment.
All this is pretty simple, eh? I’ve tried crazy savings plans in the past but, like most everything in life, the simple solutions are usually the best.
Ugh. 15% right out the door. All before we’ve even hardly made an acquaintance. I want that 15% to be saved and invested so it can work for me, dang it! But no, there’s a certain ‘cost of doing business’ involved with keeping me alive and happy. Soooo let’s talk about that.
Food: $75 per month (comment below with questions lol)
Auto insurance: $18.07 per month
Fuel: $17.50 per month (I mostly bike but drive home about once a month to see my family). Hypermiling FTW.
Car Repairs: Basically non-existent (see bit about biking above) but we’ll say $30 per month to cover the eventual oil change, random hose. I fix EVERYTHING on my car myself, too so there are no added labor charges.
Housing: Was free (read this post), then it was $275 (read this post), but now I’m failing a tad by living in luxury at $300 per month (utilities, all that jazz, included). I’m not kidding about the luxury, the house I live in is nicer than most (HOA, BBQ deck, pool, cleaning lady, other fancy-nonsense that I never use).
Bike accessories/repairs: $10 per month
Cell: $10 per month. Check out Republic Wireless…
Toiletries: $20 per month. Normally much lower but I get a few laser/microdermabrasion treatments each year to make myself beautiful (aka fix my face from my acne-inflicted teen years).
Entertainment: Hmmmm. The internets are free… 🙂 Well, I usually spend <$100 per month but this category includes gifts so I total entertainment per month at $100.
Healthcare: FREE, as I’m under 26 so I can piggy back on my parents plan (no extra cost to them).
Students Loans: ZERO. I just put this in here for lolz. I’m a big believer in making money before spending it but if a person has to take loans, they should be wiped out ASAP. I did have $16.5k in debt when I graduated.
Total: $580.57 per Month
Holy cow, that sounds like a lot actually. I’m sure I could skinny-up this budget should the needarise. I could lower each one of these categories (except auto insurance and fuel) if I needed to. But, like I said earlier, I need to stay happy.
Increased Necessary Spending as You Age
Living as a single person with a decent income IS NOT EXPENSIVE. No special thrify talent required. Remember, saving money is easy (um.. because you don’t really do anything), spending it takes effort. You may say that “Oh, he gets free healthcare and fixes his own car and he’s a guy who doesn’t need to buy makeup to look hot, etc., etc. But when I have to pay for healthcare, my income will be significantly higher so my percentage saved will still likely be 85%. I enjoy working on my own car and most people don’t. If you don’t, I would suggest you make maybe $30 extra per month to give your savings rate a boost (Fiverr, maybe?). And yes, I’m a guy so I have it easier in the beauty department. But I do workout a lot so maybe all the extra food I eat makes up for the beauty expenses. That sentence probably made quite a few girls laugh. Please excuse my ignorance.
When you’re young, life is cheap, hence a high savings rate. When you’re old, you’re making such good money that your percentage saved can remain high even as expenses go up. As expenses increase, make sure income increases! NEVER STAGNATE. If I was still making the same money as I was last year, I would not be pleased. You shouldn’t be pleased with the same results either.
Life’s Necessities Will Get Cheaper
Here’s my rave for the day… the bare necessities of life are only getting cheaper! More competition drives lower prices. The more and more advanced our society gets, the less people have to spend on the necessities in life. More arable land and advanced genetics, means cheaper food prices. More communications companies mean cheaper prices for your cell phone bill. Better technology in cars means fewer repair bills. Heck, 40 years ago a car that got to 100,000 miles was considered beaten to death. My last car had 310,000 miles and was still purring along until it got side-swiped. The more technologically advanced our society becomes, the more money we can save. The temptation to spend more will become greater but that can easily be wiped out with a little self-discipline.
What About You?
Okay, so that’s how a person saves 85% yet remains happy with life. Feel free to rag on this in the comments below. Unless you’ve written a generic (spam) comment in broken English that originates from the Middle East, I will approve it. No moderation here. Hate if you want to hate, I’m cool with that. I doubt you guys will be anything less than kind though.
How much of your hard-earned money do you save? Did I give you any ideas for how to save more?
Also, if all this is a bit much for you, I recommend using the Digit savings tool. It puts your savings on autopilot. It’s invite only right now, so you have to use my referral link found here: https://digit.co/r/Wy4qt
Read part 2 of this post here: I Save 85% by Deploying the Antibudget