Extreme Savings, Money Mentality

How I Save 50% of My Income (And How You Can Too)

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:

 

Photoshop_expenses

 

TOTAL: $1,380

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.

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30 Comments

  • Reply Sarah Noelle @ The Yachtless October 28, 2015 at 11:57 pm

    This is awesome, Taylor! And yay for not owning a car. I don’t own one either, and my goal is to keep it that way. I tried bike commuting for about a year and a half, and there were a lot of things I loved about it, but in the end I switched to a combination of walking (it takes me 50 minutes to get to work, which is good exercise too!) and taking public transportation.
    I’m curious to hear more about how you came to make these choices — not just the biking, I mean, but rejecting the norm and living off of 50% of your income. (For me it took a lot of years of making not-great choices, followed by an Aha! moment.) Maybe I’ll find out after I’ve explored around your site some more. 🙂

    • Taylor
      Reply Taylor October 30, 2015 at 1:17 am

      Yay for the no car club! I still have mixed feelings about biking to be honest (in case you couldn’t tell, haha). Right now I’m biking 3 days a week and get a ride from my sister (who studies at the university where I work) the other two. I love walking though! Is public transportation pretty good where you live?

      A big part of my obsession with finances and decreasing consumption came from reading Mr. Money Mustache. I stumbled across his blog when I had just turned 20 and right before I found out I would have to pay for my final two years of school. His philosophies about life and money aligned with things I had already been feeling (i.e. 9-5 until 65 sounded unenjoyable/restrictive and humans were hurting the earth because of greed, etc.), but I hadn’t made any changes at that point. Living in (almost) poverty and having no access to money gave me the push I needed to fully commit to a different lifestyle and adopt his teachings, even some of the more “extreme” measures. Probably more than you wanted to know 😉 haha. But that pretty much sums up my interest in finances and savings.

  • Reply Chris Muller October 29, 2015 at 12:02 am

    Hey Taylor – just found your blog and I am really enjoying it. My wife and I also live on 50% of our income and while it’s not easy, it’s also not complicated. The one thing I’d add to your list is that you have to be okay with messing up. For instance, we put half of our paychecks into savings (right now we’re loading cash as we’re waiting on a baby arrival) and try to live off the rest – mortgage, bills, expenses, etc. That includes our “fun” money. If we go over one month, we swing some money over from savings and try to do better the next month. Some months it’s the opposite and we spend way less, thus we move that money into savings.

    You’re right, though, it’s not normal. Just ask my tiny, fuel-efficient, cost-effective Honda Fit (I’m 6’4″).

    • Taylor
      Reply Taylor October 30, 2015 at 12:58 am

      Thanks for the comment, Chris! I’m so glad you stopped by because it lead me to your blog (which is fantastic!) I completely agree about the “messing up” part. In fact, I think like that philosophy is worthy of an article of its own. What you mentioned about taking money from savings during some months and having cash left over on others, is exactly how I budget as well. It makes life so much simpler and eliminates financial guilt (which is the worst). Although I wouldn’t even consider it messing up to be honest. I think it’s being human 🙂 Thanks for the great addition to the post. I’m looking forward to writing about the art of “messing up” (and following your blog!)

  • Reply Des @ Half Banked October 29, 2015 at 12:03 am

    Taylor this is so fantastic!

    I couldn’t agree more on all the points, and I honestly hadn’t even really considered the “exploit your good fortune” angle before, but it is SO true.

    We all have something that could be considered GREAT fortune, and just because it isn’t available to everyone, doesn’t mean we should be any less than grateful and proud of its presence in our lives. That’s a reminder that I’m going to take with me as I evaluate my own great luck (free health care? Thanks, Canada!) and hear about the wonderful opportunities and luck of other people (whether it’s cell phone bills covered or an insanely great benefits package at work!). Taking this approach is good financial sense, but it’s also a way to look at it and avoid the envy that can be such a knee-jerk reaction when hearing about this kind of stuff.

    I just love everything about this, and I think way more people should be going way beyond what’s “normal” – it’s going to set you up to win SO hard with your finances! Kudos, and I look forward to reading way more from you!
    Des @ Half Banked recently posted…Three (And A Half?) Can’t-Miss Personal Finance PodcastsMy Profile

    • Taylor
      Reply Taylor October 30, 2015 at 12:52 am

      Ahhh, free health care sounds amazing. My partner is British (another place where it’s free) but lives with me in California, so healthcare is a frequent topic in our household, haha. It’s interesting because writing this post actually helped me realize my own “financial good fortune.” I think the freebies and good stuff can be easy to take for granted. So I’m glad we’re fighting against that human tendency 😉 Okay, this is the last time I’ll say this, I promise. But I seriously love your blog and keep going back to read your older articles in my spare time, haha. Keep up the great work!

  • Reply Our Next Life October 29, 2015 at 5:34 am

    Hi there. Just found your blog, and I’m super impressed that you’re so focused on saving so soon after graduating. Congrats! The habits you build now will serve you well for years to come. We are now just a couple years from early retirement, but definitely could already be there if we hadn’t made some dumb financial decisions like believing we deserved nice things and needed to live a little by dining out all the time when we were in those first few years post college. Good luck on your debt repayment, but sounds like you don’t need luck. 🙂
    Our Next Life recently posted…Consider Your Anchors // How We’ve Dodged the Lifestyle Inflation BulletMy Profile

    • Taylor
      Reply Taylor October 29, 2015 at 10:52 pm

      Hello, Our Next Life! I’m SO glad you stopped by because it turns out I freaking love your blog! haha. I may or may not have just spent the past 45 mins reading articles on it…. 😉 It is a wealth of awesome information and I am so excited to follow your last few years to retirement. Thank you for the kind words and encouragement! You two are the early retirement pros, so I’m looking forward to learning a lot from your blog.

  • Reply Gracie October 29, 2015 at 6:24 am

    Great post! Love your writing Taylor and as a fellow saver I always enjoy reading about how/why other people are saving too. Keeps me inspired and motivated 🙂

    For the last six months I have been cutting down my expenses and now save between 40-60% of my take-home pay each month (similarly on a slightly below average income).

    My tips for anyone looking to reduce their expenditure would be:

    1. Challenge your bills – this always felt like it would be such a hassle but by doing minimal research and adjusting services or changing suppliers (which was easier than I thought!) I managed to cut back by about £500-600 per year.

    2. Plan your meals for the week – this was the main way I cut back on my grocery bill as it helped me to shop smarter and forward plan instead of being at the mercy of my memory or what I happened to fancy at the time while shopping. I also switched to online food shopping as it massively reduced my impulse purchases!

    3. Have a massive clear out/declutter – nothing helps you to stop spending money more than realising how much you spent in the past on things you thought you needed or wanted but that so soon after are now undesirable to you and just collecting dust and taking up space in your home.

    Plenty more but won’t waffle on forever! Look forward to reading more.

    Gracie

    • Taylor
      Reply Taylor November 12, 2015 at 4:41 pm

      Hi Gracie, thanks for stopping by 🙂 Your tips are phenomenal and so true. In fact, I feel like I could a whole blog post about your tips alone, haha. I’ve actually been procrastinating the “challenge your bills.” It’s so true what you said—it does feel like a lot of effort. But knowing that it wasn’t that hard for you is super inspiring. Do you have any tips about the process or the best way to do it? I’m particularly interested in tackling my Internet bill.

      Congratulations on saving 40-60%. Woohoo! That is seriously impressive 🙂 What part of England are you from? I met my partner (who is British) when I was studying abroad in London a few years ago. We’ll actually be back in London next month to spend Christmas with my in-laws! 🙂

      • Reply Mak November 27, 2015 at 1:28 pm

        Hi Taylor,

        I have Comcast and what I did was lower my internet speed to cheapest package ($29.95 for 3MB) This works fine for internet browsing but probably not enough speed if you are streaming movies etc. Then wait about a month and call up and ask if they have any promotions. If they say no just call back the next month. I’ve got a 6 month to 1 year upgrade in speed for the same price. (20 – 50 MB) But also note: Make sure you write down when your promo ends so you can call back. Otherwise it will revert back to the full price rate when the promo is over.

        • Taylor
          Reply Taylor December 3, 2015 at 12:12 am

          Thank you so much, Mak! I can’t wait to try this out and save some cash 🙂

  • Reply Sharyl October 29, 2015 at 3:50 pm

    Way to go! Thanks for the motivation. We have been a frugal home with dh and myself, plus 4 teenagers…for the past 10 years. When you stop the constant shopping you can save lots. My two daughters would rather spend their money at a consignment shop then the mall. I feel good that they appreciate what their money is worth.

    Looking forward to following your blog. Sharyl

    • Taylor
      Reply Taylor October 29, 2015 at 8:02 pm

      Thanks, Sheryl! That’s so amazing about your daughters. It sounds like you have given them the best gift ever—financial smarts. I would love to hear how you stay frugal with teenagers. It sounds like quite an undertaking, but also very rewarding. Congratulations on your wonderfully frugal lifestyle and successfully raising 4 money smart teens! 🙂

    • Reply Mrs. Dibidend November 15, 2015 at 7:59 pm

      that’s great! I only recently starting thrift shopping and I always find great stuff! I wish I started earlier!

  • Reply Tri October 31, 2015 at 6:00 pm

    I discovered personal finance, frugal living and minimalism about a year ago. Since then, I’ve paid off my remaining student loan of $12,000 and $5,000 credit card debt. I’m currently saving 40% of my income and living a very simple life in a very expensive city – Washington, DC. My rent is also about $850 and I bike to work everyday – my commute is only 10 minutes!!! I maintain a cash diet for my monthly expenses to help me stay on budget and to keep me from getting back into credit card debt.

    I take out $300 in cash every paycheck (every 2 weeks):
    $100 Groceries (I mostly shop at Trader Joe’s – low prices and lots of organic options!!)
    $100 Eating Out/Going Out/Fun
    $20 Hair Cuts
    $10 Dog Food
    $20 Laundry
    $50 Dad – I send $100 to my Dad each month to help with some of his expenses
    (I pay my reoccurring bills with my debit card – rent, cell, utilities, dog insurance and renter’s insurance)

    With the cash diet, once I run out of cash, I would either take from the other categories or stop spending. I usually end up with $20-$40 left over every 2 weeks, and I deposit the extras into my savings account.

    • Taylor
      Reply Taylor November 3, 2015 at 11:37 pm

      Congratulations on paying all of your loans and debt! I can only imagine how freeing and wonderful it feels 🙂 Our monthly expenses (and student loan amounts) are almost identical! haha. It’s always so inspiring to see someone else living in an expensive city and maintaining a frugal but awesome life. I LOVE the idea of a “cash diet.” Instead of all cash, I typically load up $150 to a Costco gift card at the beginning of the month for food, transfer all my bill money to my savings for temporary storage and then leave my “fun” money on my debit card. I like to spend at least a bit on my credit cards each month to get rewards points for travel since my family lives on the other side of the country, but I love the simplicity and ease of the all cash approach. Once I hit my credit card bonuses for the year, I think I might try it to be honest. Thanks for the inspiration and new ideas, Tri! & once again, congratulations on your debt repayment 🙂

  • Reply Sofia @ Currentlylovingsimplicity November 2, 2015 at 4:25 pm

    Not caring what other people think truly is the biggest money saver in the world. And biking everywhere. I feel so weird arriving anywhere by car. Probably because I don’t have one and only bike or go by public transport…
    Sofia @ Currentlylovingsimplicity recently posted…Nifty November ExperimentsMy Profile

    • Taylor
      Reply Taylor November 3, 2015 at 11:23 pm

      I completely agree! It can definitely be hard sometimes though. (Like when I arrive at work on my bike, drenched in sweat and see a coworker before I’ve showered, haha) That’s amazing that you bike and take public transportation everywhere! Do you live in a city with pretty good public transportation?

  • Reply Mrs. Dibidend November 15, 2015 at 7:56 pm

    This is quite inspiring. I was the same as you when I was a recent college graduate. I had a 15K loan and paid it off within a year. I was however still living with my mom for 3 years, but was able to save 35K + retirement money. I lived in Montreal, Canada where public transportation was great, so I never had a driving license and never thought I needed one. It’s a bit hard now that I live in the U.S. and where everything is far away from our place. I do however like to save gas by biking or catching a ride with someone else to save money.

    Thanks for your story.

    • Taylor
      Reply Taylor November 17, 2015 at 1:03 am

      Hi Mrs. Dibidend! Woohoo! Saving 35k is amazing 🙂 Living with your parents is the BEST way to save money fast. Sadly, my parents live on the other side of the country, but if they lived in Southern California, I would totally do it. America is probably one of the worst countries for public transportation, but like you said, it’s doable if you’re committed. I think one of the biggest barriers in (most of) the US is psychological—it feels like no one else is doing it. But once that is overcome or you just decide you don’t care (haha) then it’s fairly smooth sailing. What brought you to America?

      • Reply TJ December 5, 2015 at 6:49 pm

        Taylor, I feel like the US has some decent public transportation, but there is definitely not much on this coast and especially here in Southern California where General Motors/Ford etc paid LA to get rid of the street car lines way back when.

        What’s super discouraging to me as someone on the frugal side in Southern California is finding a partner who shares said frugal traits. It sounds like you paired off at a time when frugality was probably necessary for both partners. (college students) Do you have any tips on where a frugal person might meet other frugal types? You don’t want to make it all about the frugality, but it’s also hard to reconcile a lifestyle when you are on polar opposites on the frugal scales.

        On one hand, I feel like I’d rather be emotionally and romantically content than incredibly rich, but I also don’t want to just blow all my $$ on a new partner. This is something that I find a lot of frugal blogs don’t seem to really touch on. 🙂 The single people either don’t talk about it and the ones who are coupled off have been that way forever.

  • Reply Lady FruFru March 7, 2016 at 4:49 am

    Yes, I do! Saving is a priority and I’m actually happier when I am saving because I’m putting away money toward my goals.

  • Reply a woman June 20, 2016 at 4:05 am

    And you are not the only one 🙂
    We are a family with one child and 2 salaries under the economy average, and we have no car, no tv, but a 50% savings. These help us to pay down for the new mortgage, that will end in 15 years.
    But for the future, my estimations seems to be better: we will be able to be financial independents in… 10 years, and this is because:
    1. we live modest
    2. we save hardest
    🙂

  • Reply Julie @ Millennial Boss July 14, 2016 at 7:09 am

    Good for you! I sold my car recently and have started walking everywhere. It’s great! Saving half your income is a great accomplishment. I’d add “making frugal friends” as high on the list. When your friends are spendy it’s kind of stressful to achieve your goals.
    Julie @ Millennial Boss recently posted…Working In Your Passion is OverratedMy Profile

    • Taylor
      Reply Taylor August 5, 2016 at 1:33 pm

      Thanks, Julie! I really appreciate that 🙂 It’s actually funny cause I might be getting a car soon, haha. It’s always interesting to see how life changes throughout the years. AND YES, you’re so right. My best friends are an actual godsend. We all have similar opinions about money and it makes life so much easier and more enjoyable. Thanks for stopping by 🙂

  • Reply Piggybanknomics September 23, 2016 at 2:27 pm

    I use to believe that I needed a nice car. However, after the last few years spending around $500 to have a car (payment, not including insurance, gas, tolls etc) I really think I will get something very cheap next time around. The cost isn’t worth it. No one is in it but me. Great post!

  • Reply The Thrifty Issue November 3, 2016 at 8:52 am

    Wow, Taylor! I appreciate your bravery, standing against the norms. It takes courage to do so! I try to cut back expenses and commute from time to time and I think it’s really helpful in saving money. I like to save 50% of my income by not spending on things that are unnecessary no matter how tempted I am. Thanks for sharing!

  • Reply Sagar Nandwani November 23, 2016 at 9:48 pm

    Too often people get caught up in life style inflation and miss the opportunity for savings. I agree and like the save your spouses income approach. I also think when you receive an increase in salary is another good opportunity to save.
    Sagar Nandwani recently posted…5 Reasons Why Bullion is Ideal for Your Retirement FundMy Profile

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