Achieving financial independence (FI) might seem like a distant dream, but it’s closer than you think. By following some tried-and-true strategies, you can take control of your finances and work towards a future where money is no longer a worry. In this post, you’ll discover 10 secrets that can help you reach FI, from smart investing to mindful spending. Get ready to learn practical tips that can pave the way to a financially free life.
How does this sound?
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Reaching financial independence is about having choices and freedom. It means you can decide how to spend your time without money worries.
What is FI? Or Financial Independence?
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Financial Independence (FI) means having enough money to cover your living expenses without working. It’s about having freedom and control over your time.
To learn more: What is Financial Freedom? 12 Steps to Achieve It
Why does FI matter?
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FI matters because it gives you the ability to choose how you live your life. You can retire on your terms and spend time doing what you love.
To learn more: Discover Time Freedom & Design a Happy Life You Enjoy
1. Save Money Today
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Saving money today helps you build wealth for the future. It’s the first step towards financial independence and having more choices later on.
To learn more: Top 20 Epic Money Saving Challenges Unveiled to Save Money
2. Spend Less Than You Make
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Spending less than you make is key to growing your wealth. By managing your expenses, you can save more and reach financial independence faster.
To learn more: 12 Straightforward Ideas to Cut Spending and Budget Better
3. Learn How to Invest
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Learning how to invest is essential for growing your wealth. Investing wisely helps your money work for you, leading to financial independence.
To learn more: How To Invest In Stocks For Beginners: Investing Made Easy
4. Set Financial Goals
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Setting financial goals keeps you focused on your path to financial independence. Clear goals help you track progress and stay motivated.
To learn more: 10 Smart Financial Goals That You Need
5. Prefer a Debt Free Lifestyle
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Living a debt-free lifestyle means more financial freedom. Without debt, you can save more and invest in your future.
To learn more: 7 Simplistic Habits Needed for Debt Free Living
6. Choose to Live Frugally or Not
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Choosing to live frugally can speed up your journey to financial independence. It’s about making smart spending choices that align with your goals.
To learn more: The Ultimate Guide to a Frugal Lifestyle
7. Make Your Finances a Priority
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Making your finances a priority helps you stay on track to reach financial independence. It’s about regularly reviewing and managing your money.
8. Be a Constant Learner
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Being a constant learner helps you make better financial decisions. The more you know, the better you can grow your wealth and achieve financial independence.
To learn more: 35 Life-Changing Books That Will Change The Way You Think And Feel
9. Know your FI Number
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Knowing your FI number gives you a clear target for financial independence. It helps you understand how much you need to save and invest to retire on your terms.
To learn more: How to FI and Know Your FI Number Calculator
10. Become a Millionaire from No Money
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Becoming a millionaire from no money is possible with the right strategies. By saving, investing, and staying focused, you can grow wealth and reach financial independence.
To learn more: 15 Genius Strategies to Become a Millionaire with No Money
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
If you’re contemplating a job change or angling for a salary increase, you may have questions about whether a $95,000 salary will sustain you. Consider that the typical worker in the U.S. earns around $63,795 a year, according to the Social Security Administration. A $95,000 annual paycheck is nearly 49% higher than that.
Let’s see where you’d fall on the earnings spectrum compared to others in the U.S. and also explore ways to budget a $95,000 annual salary.
Is $95K a Good Salary?
While not quite a six-figure salary, $95K is generally considered a good income for a single person. But whether that amount works for you depends largely on where you live and your personal standards. For example, you may find that a $95,000 salary goes further in Des Moines than Honolulu, which has a higher cost of living.
No matter where you live, a budget planner app can help you set customized budgets and categorize spending, so you can make the most of your income.
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Recommended: Average Salary in the U.S.
Average Median Income in the US by State in 2024
As in real estate, location is an important factor when it comes to salaries. Wages for the same job can vary widely from one state to another, driven largely by differing costs of living.
Here’s a look at the median household income in each state, per U.S. Census Bureau data.
State
Median Household Income
Alabama
$59,609
Alaska
$86,370
Arizona
$72,581
Arkansas
$56,335
California
$91,905
Colorado
$87,598
Connecticut
$90,213
Delaware
$79,325
Florida
$67,917
Georgia
$71,355
Hawaii
$94,814
Idaho
$70,214
Illinois
$78,433
Indiana
$67,173
Iowa
$70,571
Kansas
$69,747
Kentucky
$60,183
Louisiana
$57,852
Maine
$68,251
Maryland
$98,461
Massachusetts
$96,505
Michigan
$68,505
Minnesota
$84,313
Mississippi
$52,985
Missouri
$65,920
Montana
$66,341
Nebraska
$71,772
Nevada
$71,646
New Hampshire
$90,845
New Jersey
$97,126
New Mexico
$58,722
New York
$81,386
North Carolina
$66,186
North Dakota
$73,959
Ohio
$66,990
Oklahoma
$61,364
Oregon
$76,362
Pennsylvania
$73,170
Rhode Island
$81,370
South Carolina
$63,623
South Dakota
$69,457
Tennessee
$64,035
Texas
$73,035
Utah
$86,833
Vermont
$74,014
Virginia
$87,249
Washington
$90,325
West Virginia
$55,217
Wisconsin
$72,458
Wyoming
$72,495
Recommended: Highest Paying Jobs by State
Average Cost of Living in the US by State in 2024
How much you pay for necessities like housing, transportation, health care, and food can impact just how far your $95,000 salary will go. When figuring out whether $95,000 is a good salary for a single person, it can help to look at how much people in different states are spending on housing, food, health care, and other basics. The U.S. Bureau of Economic Analysis’ (BEA) list of personal consumption expenditures, below, compiles this information.
State
Personal Consumption Expenditure
Alabama
$42,391
Alaska
$59,179
Arizona
$50,123
Arkansas
$42,245
California
$60,272
Colorado
$59,371
Connecticut
$60,413
Delaware
$54,532
Florida
$55,516
Georgia
$47,406
Hawaii
$54,655
Idaho
$43,508
Illinois
$54,341
Indiana
$46,579
Iowa
$45,455
Kansas
$46,069
Kentucky
$44,193
Louisiana
$45,178
Maine
$55,789
Maryland
$52,651
Massachusetts
$64,214
Michigan
$49,482
Minnesota
$52,849
Mississippi
$39,678
Missouri
$48,613
Montana
$51,913
Nebraska
$37,519
Nevada
$49,522
New Hampshire
$60,828
New Jersey
$60,082
New Mexico
$43,336
New York
$58,571
North Carolina
$47,834
North Dakota
$52,631
Ohio
$47,768
Oklahoma
$42,046
Oregon
$52,159
Pennsylvania
$53,703
Rhode Island
$52,820
South Carolina
$46,220
South Dakota
$48,997
Tennessee
$46,280
Texas
$49,082
Utah
$48,189
Vermont
$55,743
Virginia
$52,057
Washington
$56,567
West Virginia
$44,460
Wisconsin
$49,284
Wyoming
$52,403
Recommended: Average Income by Age
How to Budget for a $95K Salary
No matter how much money you earn each year, it’s a smart idea to create a budget. One of the first steps you’ll want to take is to figure out how much money you have left after withholding for federal income taxes, Social Security taxes, and Medicare. On average, the take-home pay on a $95,000 salary is around $74,991.50, though that doesn’t include state taxes.
Once you’ve determined your after-tax income, consider using the 50/30/20 rule for budgeting. This means 50% of your income goes toward needs, 30% goes toward “wants,” and 20% goes toward savings or debt repayment beyond your minimum amounts.
Let’s say, for example, you live in Massachusetts. Your $95,000 salary would break down to $5,757 per month due to taxes (based on a 27.3% average tax rate and 35% marginal tax rate). Using the 50/30/20 rule, you’d put the following amounts in the corresponding pockets:
• 50% needs: $2,878.50
• 30% wants: $1,727.10
• 20% savings or debt repayment: $1,151.40
After you have your budget in place, a tool like an online money tracker can help you monitor your spending as well as keep tabs on your credit score.
Maximizing a $95K Salary
Whether you’re earning $95,000 as an entry-level salary or after several years on the job, there are ways to make the most of your income. Here are some strategies to consider:
• Build an emergency fund. Aim for a cushion of three to six months of living expenses.
• Max out your retirement savings account — and make sure you’re taking advantage of a company match, if one is available.
• Explore investing in securities that charge minimal fees.
• Work on improving your credit score, which can boost your chances of getting competitive interest rates.
Quality of Life with a $95K Salary
While it’s a highly subjective measure, “quality of life” typically refers to a combination of personal preferences, including job satisfaction, family life, health, and safety. How well you can live on your salary often boils down to your expenses and how and where you choose to spend your money.
By and large, many people with $95,000 salaries find they can live quite comfortably. However, if you spend more than you earn or rely on credit to fund your lifestyle, you may find you have trouble making ends meet on your income.
Is $95,000 a Year Considered Rich?
The Charles Schwab Wealth Survey reported that a national sample of Americans between the ages of 21 to 75 believe you need to amass $2.2 million to be considered wealthy. However, according to the same survey, Americans who say they feel wealthy have less than that — around a $560,000 net worth.
Note that it’s possible to accumulate wealth if you’re earning $95,000 a year, though it may take some time. Common strategies include relying on investing and compound interest to increase net worth, saving money, and setting money aside in a company retirement plan.
Recommended: Net Worth Calculator By Age
Is $95K a Year Considered Middle Class?
Middle class is defined as income that is two-thirds to double the national median income. By that definition, a middle-class household makes between $47,189 and $141,568, and $95,000 is in that range.
However, that’s for the nation. When you drill down to the city and state level, you see that the income required to be middle class varies. For instance, to be considered middle class in San Francisco, you’ll need to earn between $91,126 and $151,877. In Washington, D.C., middle class is defined as income that falls between $67,815 and $113,024.
Example Jobs that Make About $95,000 a Year
Many career types fall into the $95,000 salary range, including jobs for introverts. Here are some examples of careers you can pursue, which require a range of degree levels from associate to graduate:
• Financial Analyst: $99,890 per year
• Industrial Engineer: $99,380 per year
• Radiation Therapist: $98,300 per year
• Occupational Therapist: $96,370 per year
• Civil Engineer: $95,890 per year
• Architect: $93,310 per year
The Bureau of Labor Statistics offers an occupation finder in its Occupational Outlook Handbook, which you can sort by median pay over $80,000.
The Takeaway
Is $95k a good salary for a single person? By and large, yes, but your spending habits, budgeting skills, and local cost of living can all impact how far your money goes. With careful budgeting and saving, you can make the most of your income.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
Can I live comfortably making $95K a year?
Generally speaking, many people can live comfortably making $95,000 per year. However, it depends on several factors, including where you live, how much you spend, and where you put your money. Those who live within a budget feel the most comfortable with that salary.
What can I afford with a $95K salary?
Let’s target one of the most expensive assets most people own: a home. You may wonder how much house you can afford without stretching yourself.
Experts often suggest the 28/36 rule, which means that you should spend no more than 28% of your gross income on housing and no more than 36% on all your debt, which might include housing, student loans, car payment, credit cards, etc.
For example, according to the 28/36 rule on a $95,000 salary, you should spend no more than $2,216 on housing per month.
How much is $95K a year hourly?
A $95,000 salary breaks down to $45.67 per hour. This per-hour figure might not help you budget or understand your overall income, but it’s interesting to analyze.
How much is $95K a year monthly?
You’ll bring in $7,916.67 per month with a $95,000 per-year salary. It’s important to note that this is the general breakdown for that salary — your state may charge more in taxes and you may actually make less.
How much is $95K a year daily?
You’ll earn $365.38 per day with a $95,000 salary. Similar to your hourly rate, you might find this number difficult to help you budget or for use in a net worth calculator by age, but it’s interesting to know.
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The best time to rent an apartment for lower rates is during winter (October to April) when rates and demand are lowest, especially from January to March.
The best time to look for an apartment before moving is in the middle of the month before your official move month.
The real estate market is seasonal, so being aware of these patterns can impact the ease of your search and the rental price you’ll pay.
Whether you’re moving to an apartment in LA during the summer or looking for a rental in NYC in the winter, timing can significantly impact your apartment rental experience. The real estate market is both cyclical and seasonal, with variations that affect rental prices and availability.
While winter is best for lower rental rates and less competition, summer is best for a larger selection of available apartments. Whether you’re looking to save money or have a wider selection to choose from, it all comes down to your priorities, and understanding these market trends can help you make an informed decision.
Winter is best for lower rental rates
Winter is the ideal time to find lower rental rates and secure budget-friendly deals on apartments. From October through April, the demand for apartments significantly drops. This decrease in demand leads to reduced rental prices as landlords and property managers strive to fill vacant units. During these slower months, they are often more willing to negotiate and offer attractive incentives to attract tenants.
For example, in January, the average rental price in New York was approximately $4,064. In contrast, during the summer, prices increased to around $4,726 in June, which is an increase of $662, or roughly 16.3%. Therefore, if cost savings are your top priority, winter is the best time to start your apartment search.
Summer is best for more rental listings
Summer is the peak season for apartment hunting, offering a broader selection of available apartments. From May to September, the rental market experiences significant turnover as many leases end and new ones begin, resulting in higher inventory. This influx of available units provides renters with a wide variety of options to choose from, including different sizes, styles, and locations.
While rental rates tend to be higher during these months due to increased demand, the abundance of listings makes it easier to find a place that meets your specific needs and preferences. Additionally, moving during the summer months can be more convenient due to longer daylight hours and more predictable weather. For those prioritizing selection and variety, summer is the optimal time to search for an apartment.
Renting an apartment in the Fall or Spring? Here are the pros and cons
Renting apartments in the Fall
Pros:
Lower rental rates: As the peak rental season winds down, landlords may be more willing to negotiate lower rents or offer incentives such as a free month’s rent or reduced security deposits to fill vacancies before the slower winter months.
Lower competition: There are fewer people moving during the fall compared to the summer, which means less competition for available units. This can give you more time to consider your options without the pressure of making a quick decision.
Mild weather: The weather in the fall is generally mild, making the moving process more comfortable compared to the extreme heat of summer or the cold of winter.
Cons:
Limited inventory: The number of available listings tends to decrease after the peak summer season, which can limit your options for finding the perfect apartment.
Lease overlap: If you are currently in a lease that ends in the summer, moving in the fall may require you to break your existing lease or manage a period of overlapping leases, which can be costly.
Renting apartments in the Spring
Pros:
Increased inventory: Spring marks the beginning of the peak rental season, with many leases ending in the summer. This results in a higher number of available listings, providing you with a wide variety of options to choose from.
Best weather: Spring offers pleasant weather conditions, making it an ideal time for moving and apartment hunting. You can explore neighborhoods and visit potential apartments without the discomfort of extreme temperatures.
Cons:
Higher rental rates: As demand increases during the spring, rental rates tend to rise. Landlords are less likely to offer discounts or incentives, and you may end up paying a premium for your new apartment.
Increased competition: The influx of renters looking to move in the summer means more competition for available units. You may need to act quickly and be prepared to make decisions on the spot to secure a desirable apartment.
Remember: Different cities have different peak times
The general trends for when to rent an apartment hold true, but peak rental seasons can vary significantly depending on the city. For instance in college towns, the best time to look for an apartment is often right after the school year starts in September, with many leases becoming available at the end of the school year in early spring.
In cities like New York, peak rental activity occurs in the summer, while in places like Miami and Atlanta, the high season extends from May through November and may not see as intense of a spike. Understanding these regional differences can help you strategically plan your apartment search to find the best deals and most suitable options for your needs.
Best time to rent and apartment FAQs
What time of year is rent the cheapest?
If your main concern is saving money, the cheapest time to rent an apartment is during the winter, especially in November. During the holiday season, less people are moving, resulting in lower demand and rental rates. While you might have fewer choices of available apartments since most leases end in the summer, landlords are often more willing to offer lower rental rates and concessions, such as skipping the security deposit or offering better deals on utilities, to avoid having units sit empty.
What is the best time of the month for apartment hunting?
The best time of the month for apartment hunting is generally in the middle of the month. This timing is strategic because many leases end at the end of the month, and landlords start listing new vacancies and preparing units for new tenants around the middle of the month. By beginning your search mid-month, you can get a head start on newly available listings. This helps you avoid the rush at the end of the month when many others are also looking to secure new rentals.
What time of the month do most apartments become available?
Most apartments become available at the beginning of the month. This is primarily because leases typically end on the last day of the month, and new tenants often move in at the start of the new month. Consequently, landlords and property managers prepare for turnover during this period, listing new vacancies and getting units ready for incoming tenants. To maximize your chances of finding an available apartment, it is beneficial to start your search a few weeks before the end of the month and be ready to act quickly as new listings appear.
How early should you look for an apartment?
You should start looking for an apartment about 30 to 60 days before your desired move-in date. This time frame allows you to explore various options, complete necessary paperwork, and arrange for any needed moving logistics without feeling rushed.
What is the best time of day to search the rental market?
If you want to get really specific, the best time to check online listings is between 9 and 10 a.m. Why? That’s when property managers are most likely to post new apartment listings for recently vacated rentals. You can strike while the iron is hot.
Rental data and prices is from Redfin and was pulled in June 2024
Looking for a simple and effective way to save money? The envelope challenge might be just what you need. This popular saving method helps you set aside cash in an organized and manageable way. By using envelopes to allocate funds for different expenses, you can easily track your spending and boost your savings. Start one of these envelope challenges today and take control of your finances.
Why Use a Saving Challenge?
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Saving money can be tough, but using a saving challenge can make it easier and even fun. These challenges give you a clear plan and simple steps to follow, helping you stay motivated and reach your financial goals. Whether you’re saving for a big purchase, building an emergency fund, or just wanting to improve your money habits, a saving challenge can be a great tool. Learn how to start, stay on track, and see real results with a saving challenge that fits your lifestyle.
Various Money Saving Challenge to Try
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Get empowered with these popular money saving challenges. From the envelope challenge to monthly savings, become savvy with your finances.
To learn more: Top 20 Epic Money Saving Challenges Unveiled to Save Money
The 100 Envelope Challenge
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The 100 Envelope Challenge is a fun and creative way to save money. This popular challenge can be adjusted to fit different budgets and financial goals, making saving money easier and more enjoyable.
To learn more: The 100 Envelope Challenge: Easy and Fun Way to Change Your Life!
50 Envelope Challenge to Start Saving
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Looking for a simple way to save? Try the 50 Envelope Challenge and save $1275 using just 50 envelopes. This challenge helps you build savings step by step.
To learn more: 50 Envelope Challenge to Save $1275 and Follow Through!
Build Habits with 200 Envelope Challenge
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Challenge yourself with the 200 Envelope Challenge and see how much you can save in 200 days. It’s a great way to grow your wealth and build strong saving habits.
To learn more: 200 Envelope Challenge – A Spin to Save at Least $5K
Challenge to Save 10k in 100 Days
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The 10k in 100 Days Envelope Challenge is perfect for those looking to save big in a short time. Follow this guide and save $10,000 in just 100 days, setting yourself up for a better financial future.
To learn more: The 10k in 100 Days Envelope Challenge – Save to [Make it Work] for You
Alternative is 52 Week Money Saving Challenge
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Choose from different 52 Week Money Saving Challenges and save $1000, $2000, $5000, or even $10,000. Join the email list for your free printable and start saving today.
To learn more: Your 52 Week Money Saving Challenge + Free Printable
Tight on Funds? Try These Mini Saving Challenges
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Tight on time or money? These mini savings challenges are perfect for you. Use these free printables to include a simple money saving challenge in your budgeting tools and save more money easily.
To learn more: 15 Mini Savings Challenge Printables To Save More Money
Download Your Free Printables
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Download this free printable for the 100 Envelope Challenge and start saving money now. In 100 days, you’ll have saved a total of $5000, making it a great tool for building your savings.
To learn more: [Free Printable] 100 Envelope Challenge: The Best Money Saving Challenge
Most Popular: 100 Envelope Money Challenge
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The 100 Envelope Money Challenge is a favorite way to save money. It’s fun, easy, and can be tailored to your budget. Join many others in reaching your financial goals with this creative and effective challenge.
To learn more: The 100 Envelope Challenge: Easy and Fun Way to Change Your Life!
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Looking to save money fast? Here are the top 10 frugal living tips that will transform how you think about and handle money. These simple changes can help you save more, spend wisely, and enjoy financial freedom. Start your journey to better money management today with frugal living.
1. Wait 24 hours to Buy
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Before buying anything, wait 24 hours. This helps you decide if you really need or want it. Often, you’ll find you don’t, saving money in the process. This is mandatory for anything over $500 for us.
2. Make a Plan for Your Money
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Plan where to save and spend your money before you get paid. This helps you prioritize savings and manage expenses, leading to better financial health.
To learn more: Budgeting Made Simple
3. Say No To Debt
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Avoid debt by saving for big purchases and paying in cash. Debt payments can hold you back, so staying debt-free helps you move forward financially.
To learn more: 7 Simplistic Habits Needed for Debt Free Living
4. Decide Where to Spend Money
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Be mindful of where you spend money. Identify what’s important to you and avoid unnecessary expenses. This helps you manage your finances better.
Start Here: No Spend Challenge: The #1 Fastest Way To Set Spending Priorities
5. Know Your Why to be Frugal
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Understand your reason for living frugally. Everyone has different money goals, so knowing your “why” helps you stay committed to saving and smart spending.
To learn more: 10 Must Have Financial Goals to Achieve
6. Trim Grocery Budget
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Food is a basic need, but how you shop and eat affects your budget. Focus on reducing grocery spending to save money over time.
To learn more: The 60 BEST Budget Grocery List Items for Cheap Eating
7. DIY First
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Try making things yourself before hiring help. DIY projects can save you money, and there are plenty of online tutorials to guide you.
8. Find Cheaper Alternative
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Always look for cheaper alternatives. Whether it’s price matching or waiting for a sale, finding better deals is a great way to save money.
9. Choose Free First
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Opt for free options whenever possible. From activities to items, choosing free first helps you save your income for other needs.
To find ideas: 105 Fun Things To Do With No Money
10. Think Long Term
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Focus on long-term financial goals. Plan what you want your money to achieve and take steps towards those goals, ensuring future financial stability.
Which Frugal Living Tip to Implement First?
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These frugal living tips can change your financial life. Start with any tip from this list to make a big impact on your finances. Embrace these habits to save money and achieve financial independence.
To learn more: Top 10 Influential Frugal Living Tips with a Big Impact
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: These are the absolute best life hacks to saving money. This list of frugal living tips with a big impact with greatly improve your budget and finances.
There are many ways to save money. Today, we are going to focus on frugal living tips with a big impact.
Those money saving tips that will save you the most money in the shortest amount of time.
These are the big impact ones of the all of the frugal living tips out there.
If you are a frugal living beginner or desire to save money, this is what you need to start with.
For many households, you are busy and want to find the life hacks that will make the biggest impact in the shortest amount of time. Saving money is important to you. You have bigger and better aspirations in life.
For us personally, we choose to implement these frugal living tips with a big impact because we want to increase our savings percentage each and every year. We have financial independence – all thanks to the Money Bliss Steps to Financial Freedom.
You should check them out. You might be surprised how your perspective will change.
For now, we are going to stick with the frugal living tips that will save you the most money with the least amount of work. Does that sound like a good deal? You want real life hacks – not just clickbait titles. Right?
I thought so… Let’s dig in to the frugal living tips with a BIG impact!
How to Stay Frugal
The better question is why do you want to stay frugal? What are your personal reasons for being frugal?
In this particular case, we are talking about saving money.
In all honesty, staying frugal means that you are constantly wanting to save more money. You have bigger plans in your life and don’t want to be a slave to your money. You desire to make a plan for your money and that is of utmost importance for your household.
Learning how to stay frugal will turn into a frugal lifestyle. Then, for many, it will morph into a thrifty lifestyle.
It is easy to learn how to stay frugal when you have dreams and plans in your life.
In order to fund those dreams, you need to stop living paycheck to paycheck and begin to give purpose to how you spend and save your money.
If you don’t believe me, then check out this case on why being frugal leads to a millionaire’s success story.
Top 10 Frugal Living Tips with a Big Impact
Like it was stated before, there are hundreds of frugal living tips that you can implement right now to start saving money.
However, for too many people, the list is too long and they want to see immediate progress right now.
These are the TOP 10 frugal living tips that will change how you think about money, spend money, and ultimately save money.
If you want to enjoy life and money (and maybe one day reach financial freedom), this is where you want to start. With this list. Right now. Make these easy lifestyle changes and begin a new relationship with money.
1. Wait 24 Hours to Buy
This is the simplest tip to help improve your money management.
Wait at least 24 hours before you buy something.
During that time, you will figure out whether or not you actually want or need the item. If you still want it, then you can purchase it. However, many times you realize that you didn’t need it or it wasn’t exactly what you wanted. So, you end up saving some money.
Obviously, the wait 24-hour rule applies to anything outside the realms of housing, food, gas, and utilities.
One of the smallest wins is to save $50 a week using this rule because over a year, you will save $2600!
Say what!?!?
That is a big chunk of cash that you probably even didn’t realize you were spending. Now, you are one step closer to reaching financial independence.
2. Make a Plan for Your Money
How do you want to spend your money? Have you ever considered where you want to spend your money before you spend it? Don’t worry if you said no. Most people don’t make a plan for their money.
What does it look like to make a plan for your money?
Before you are paid, you decide how and where you plan to save and spend your money. Did you catch the first part? It is the biggest hint I have for you – decide where you plan to save money first. Then second, how you plan to spend the rest.
Many people call this a budget.
The key is knowing where your priorities lie before putting in all of your variable expenses. You must plan to reach your money goals first. Then, figure out how to live on the rest.
That is called making a plan for your money.
3. Say No to Debt
There is nothing frugal about taking out debt.
Around here, we call debt – the cash flow killer.
It is extremely hard to move forward when debt (specifically the debt payment) is holding you back. It is like taking two steps forward only to be taken back a step now and three steps back in the future.
How to get around not going into debt?
You save up for big purchases, and then, you can pay in cash.
Side note… For this discussion, we are not talking about mortgage debt. In many cases, mortgage debt can be considered a “better” debt because purchasing a home may have a lower mortgage payment than current rents in the area.
4. Understand Where You want to Spend Money
Spending money isn’t a bad thing… IF you are spending money in areas that are important to you.
However, too many times we are blindly spending money and not realizing where our money went at the end of the month.
Is that what you set off to do?
Probably not, but for now, you feel like you are a slave to your bills and not being able to enjoy the fruits of your labor. The time is now to figure out where your priorities lie and the area you want to spend money.
To make this process simpler, it is easier to decide where you don’t want to spend money. For us, a no spend challenge helped us visually see where we wanted to spend money and where we actually spent money. The experience was eye-opening and very valuable.
Now, we know where we want to spend money and that has made a big impact for our finances. What could it do for you?
Just to Note… There are times where you want to spend money isn’t possible because you are barely managing to pay your basic bills. This frugal living tips with a big impact is to help you understand where your goals to spend money lie and what is unnecessary spending.
5. Know Your Reason to Live Frugally
Let’s be honest… living frugally doesn’t come with a lot of materialistic perks. You are sacrificing spending money in order to save money. It is hard to watch people mismanage their money only to get bailed out again and again.
To stick with frugal living and a desire to implement saving money hacks, then you must know your reason to live frugally.
Your answer will vary from everyone else’s answer. That is okay because we all have different money goals.
Have you thought about your reason for living frugally?
Our reason to live frugally is to travel. We don’t want to wait until we retire and the kids are grown to travel. We want to travel now and explore as much as possible while we can. Over time, that has morphed into our desire to reach financial freedom and not be a slave to our jobs. (Don’t worry… I love what I do here and don’t plan to change anything.)
What is your reason to live frugally?
6. Keep your Grocery Budget Trim
This is one of the biggest frugal living areas that will have the most immense impact – how you eat food.
Food is one of the basic expenses that you need to survive. However, how you choose to fuel your body will make a difference in your budget as well as how you choose to shop.
By becoming cognizant of grocery spending, you will learn to save money on groceries, which will make a huge impact over time.
Let’s take this example… You can save $200 a month on your grocery spending. That equates to $2,400 in one year. Almost $5000 in two years. At the end of 10 years, you saved $24,000!!
That is no small chunk of change. While spending an extra $200 a month doesn’t seem like much, over time it adds up to a greater amount. That is when you realize that implementing grocery money saving tips will have a bigger impact than you realized.
Overcoming your grocery budget is a learned trait; here are the best items on your grocery budget list.
7. DIY First
I’ll be the first to admit that making something yourself can be overwhelming when you don’t have a clue where to start.
Thankfully, there are plenty of tutorials to get you started with a simple Google search.
Frugal living tips with a big impact is knowing how to do it yourself first.
Here is one that has saved us over $10,000 in the past 10 years… I learned how to cut everyone’s hair in the house. The reason we started cutting our hair was because we were looking for ways to get out of debt faster.
The worst case scenario with DIY… if it doesn’t work out how you expected then you can always call for professional help. The best case is you just saved yourself a lot of money.
Especially if you own a home, you must learn to DIY first. Many of the skills that you would hire a handyman to do used to be taught by the generation before. Too bad that this isn’t still the case. However, thanks to YouTube, you have plenty of opportunities to learn how to do it yourself.
Another option is to trade services with a friend.
8. Find a Cheaper Alternative
One of the traits of a frugal person is searching for cheaper alternatives. This is a simple money saving hack.
This could be as simple as searching for a better price online and price matching. Or even waiting for a sale or clearance.
Finding cheaper alternatives is a great way to save money. Some options include:
Buying in bulk
Buying generic
Buy less items
Finding items that have dual purposes over single use. (like instant pot / air fryer combo)
You need to open up your eyes to finding cheaper versions or figuring out how to buy what you need at a lower price.
Another alternative is to buy used. This especially holds true for new cars since they lose most of their value within the first 5 years.
Just to Note: A cheaper alternative doesn’t always mean the quality is the same. A thrifty person would want an item that will last longer than the knockoffs.
9. Choose FREE First
Oh my! This hack is one of the best frugal living tips with a big impact.
Why choose FREE first?
Then, you don’t have to spend your hard-earned income on something that is used for a short period of time.
This could be for everything you spend money on.
Find free things to do with no money.
Source items you need in Buy Nothing Facebook groups or Nextdoor.
Choose the library over buying the actual books.
Ultimately, you’re looking at how to get things and do things for free first. This doesn’t make you cheap at all. It makes you frugal. Plus it gives you the chance to spend that money on something else that aligns with your reason to be frugal.
10. Think Long Term
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Too many times, we are so focused on living paycheck to paycheck that we don’t stop to make plans on what we want the next year to be like. Or the next 3 years? 5 years? Even 20 years away?
If you are ready to make a big impact in your life today, start by dreaming and thinking long term financial goals for all of your spending and saving.
Frugal Family Tips
Really quick, we are going to spend a little time discussing frugal family tips for your household.
Why?
Well, kids are expensive and it can be hard not to want the best for your family. And it can be easy to spend money to make that happen.
But first, why should you implement frugal family tips for your household?
Hint: so you can raise financially savvy children who make smart and wise decisions with money as adults. More is caught than today.
Kids learn by example.
So, why not be the best example for your kids with money?
The above list of the top frugal living tips with a big impact is solid money management tips that will build a solid foundation of success.
There isn’t a specific list of frugal family tips. It is taking the above life hacks and talking with your family about why you are making these money decisions. Have conversations about spending money and saving money.
In the long term, teaching frugal family tips will open the door to many opportunities.
That right there, my dear friend, is the gift that will keep on giving.
Tips for Living with Very Little Money
Typically, there are two types of people who are living with very little money and they are on opposite ends of the spectrum.
First of all, don’t compare yourself to others. That slippery slope of comparison is a trap; one which will cause you great harm, stress, and financial strain.
You are looking for tips for living with very little money.
If you are struggling living paycheck to paycheck, then you are in a tough spot right now. Remember, I said right now. You can always change your financial situation. It starts with your money mindset first.
The other person is that extremely frugal person who is consciously choosing to live with very little money. That means you are prioritizing the saving percentage you save each month.
In addition to all of the tips above, you must become EXTREMELY cognizant of your plans to spend money.
You know how and where you plan to spend every single penny that you earn before the money is in your hands.
Consistently, you are finding ways to spend less money and save more money.
A no spend challenge becomes a normal way of living for you. The key is you can’t hold a grudge on your choice of extreme frugality.
Just remember, you can lead a fabulous life with very little money. Money won’t buy your happiness. Finding contentment with your life is the target.
Which Frugal Living Tips with a Big Impact will You Try First?
Okay, so in all honesty, most of these frugal living tips are great money management tips that will completely turn your life in a completely different direction.
You are here because you want to save money with simple life hacks.
This list of the top 10 frugal living tips with a big impact will flip your life upside down for the better.
You need to make a big impact on your finances. Now, you need to embrace these saving money tips and have them become natural habits.
Regardless of income, you are capable of saving your first $10k, then saving $100,000 and ultimately being a millionaire. All it takes is thinking long-term and deciding what is most important for your family and your household.
You hold the keys to a brighter financial future. Grab them and begin to open up doors to more opportunities.
In case you want more frugality in your household, in this post, we outline over 175 + of the best frugal living tips, which are great once you master the money saving tips that will have a longer lasting impact.
For now, what frugal living tips with a big impact will you try first? Comment below and let us know!
You can become the next millionaire with no money!
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
When do you typically think about Christmas shopping?
Around Thanksgiving? Year-around? Christmas Eve?
Regardless of when you plan to start your Christmas shopping, it is never too early to start creating your Christmas budget. Especially if you are Christmas shopping on a tight budget!
When are trying to figure out what should I buy for a Christmas gift on a budget? It can seem like you are putting together a jigsaw puzzle based on what you can afford.
Well, there is great news you will find out in this post! By starting a little early and planning you can guarantee Christmas shopping on a low budget will work for you! Then, you can keep on charging around with your personal money goals.
One of the best tips for Christmas shopping on a budget is to save money all year for the occasion.
That way you avoid the trap of not having money to spend and then resorting to charging your Christmas presents on a credit card. Just a warning… a small amount of debt can turn into a slippery slope and can snowball into much, much more!
Back in the day, many families received a bonus around the holidays. They would determine their Christmas budget on the amount of money they are awarded in this bonus for gifts. However, there is a downfall and risk to use this strategy because these bonuses aren’t guaranteed. Nowadays, very few companies actually give out Christmas bonuses.
So, take it upon yourself to save money on a consistent basis. This could be in the form of bank account or cash envelope. Either way, you can set aside a set dollar amount or a percentage of your income throughout the year for Christmas shopping.
If you are serious about learning how to Christmas shop on a budget, then it is crucial to start with a budget and share your plan for Christmas gifts without exceeding this pre-determined budget.
By spreading out the amount saved for Christmas shopping or actually buying gifts throughout the year, you can successfully keep your budget in control. More importantly, you can eliminate a great deal of stress, which often accompanies last-minute Christmas shopping.
This is exactly how do you make a Christmas special on a budget.
Simple Ideas on Budgeting for Christmas Shopping
One of the best budgeting for Christmas tips is to actually plan out your Christmas shopping. For some of us, who despise planning, you may loathe the idea.
However, in the end, it is one of the best money saving ideas to embrace for long term financial freedom.
If you are trying to figure out how can I do Christmas cheap, then this post has eight simple ideas for budgeting for Christmas shopping.
1. Decide Your Christmas Budget
It is necessary to determine how much to spend before your start Christmas shopping and especially Christmas shopping online.
It is never too early to start thinking about creating your budget for Christmas shopping. As much as I would like to be able to purchase everything under the sun for our friends and family, I must make choices on where my hard-earned money should go. (Hint: This is wise money management advice all-year-around.)
With most of our unfortunate reality, we must budget carefully to be able to purchase Christmas gifts for everyone on our list. With this in mind, it is very imperative to set a budget for Christmas shopping and stick to that budget you agreed on.
2. Make a Christmas List (and check it twice)
After creating a Christmas budget, making a Christmas list in the one of the best budgeting for Christmas tips you can take away!
Just like with regular money management, it is a smart move to make plans for your money BEFORE you start spending it.
Grab our free printable gift tracker and start writing down everything you can possibly buy during the holiday season.
Review your Christmas list and make sure your dream list is something that you can truly afford. Make sure to check it twice!
3. Limit the Number of Gifts
What is the true meaning of Christmas? Buying loads of presents you can barely afford or spending quality time with family and friends?
It is absolutely okay to limit the number of gifts you buy for each person on your list.
Many people apply the 4 gift rule at Christmas to stay within their Christmas budget, avoid overspending, and to teach their kids that materialistic items is not the purpose of Christmas.
This gift-giving idea is simple and based on each child receiving four presents:
a want
a need
something to wear
something to read
4. Shop Early or Shop Late?
Decide what type of shopper you are. Do you prefer to shop throughout the year and pick up frugal bargains? Or are you scrambling at the last minute to shop to do your Christmas gift shopping on a budget?
Honestly, there is no right or wrong answer.
You need to decide how to Christmas shop on a budget that will work for your personality.
Your shopping habits will decide how you will best stay within your Christmas budget and not stress more during the holiday season.
5. Use Cash
Okay, cash is becoming phased out as credit cards and debit cards are the norm. In this case, we are talking about the premise of using cash.
You have the cash available to spend on Christmas shopping sitting in your bank account.
It doesn’t matter if you shop with cash, debit card, or credit card, you can cover all of your Christmas shopping with the money allocated in your Christmas budget. The goal is to enjoy a debt free Christmas.
Before you begin to shop online, evaluate the amount of Christmas gift money you have saved. Then, double-check that amount equates with the budget set for your Christmas shopping.
Even if you are using a credit card and the bill will arrive the following month, today you must have enough money to repay the bill in its entirety and avoid paying interest.
6. Buy in Bulk
Buying in bulk is a term that refers to the idea of buying large quantities of goods or services at a discounted price.
If you’re low on money or short on time, bulk shopping can be a good idea. Many stores offer discounts for customers who purchase large quantities of goods at one time.
This is great for someone who needs to buy a large number of gifts for extended family.
7. Negotiate a better deal
Negotiate a better deal.
Sometimes all you have to do is ask for a discount.
If the company has any promotions or special offers, make sure to ask them about them before making your purchase. Just click the chat or help button when shopping online.
8. Add to Online Cart & Don’t Buy (Yet)
This is probably my favorite trick for Christmas shopping online!
Add the item to your cart and make sure you go far enough through the checkout that the company has your email address. But, don’t buy yet.
Wait for 24 hours.
More than likely, the company will send you a promo code for 10-25% off.
Shopping on Amazon? Add to a wish list. Then, the Amazon app will notify you of a lower price or lightning deal!
Cha-ching! Saving on Christmas shopping.
9. Combine Presents with Needs
This money saving tip is truly my personal favorite!
Think ahead of what the person you are buying for needs and try to find presents that suit that need.
For example, our kids wanted their own snorkeling gear for our next vacation. We have no idea when that trip will happen. So, we bought them snorkeling gear for their birthdays. Instant win-win!
Curious to know how we afford trips… We use a vacation fund.
10. find extra savings
Key tip for Christmas shopping on a budget… always look for deals and a lower price!
Given that so much Christmas shopping is done online, this is a great way to find a cheap presents for much less.
Here are some great apps to make sure you either get cash back or they check for extra coupon codes:
During this time of year, you should never pay for shipping. Honestly, it is one of the reasons, I truly like Amazon prime membership. They will drop ship your gifts to your destination at no extra cost to you.
11. Skip the Bags
Pull out the wrapping paper, ribbon, and bows!
You can spend about $10 a year to wrap all of your gifts, which is a bargain given most holiday gift bags cost about $2-5 each.
Plus if you have little eyes that like to peek, a wrapped box with ribbon is much harder to figure out their presents. This is my favorite book to teach kids about waiting patiently for their Christmas gifts. (Also, it is a big hit with my kids, too!)
Frugal Saver Tip – If you absolutely despise wrapping your presents, then save the gift bags and tissue paper to reuse year after year. That is one of the most fabulous money saving tips for Christmas shopping on a budget!
Christmas Shopping Tips:
The tips outlined are important, but they don’t tell the whole story. The key to saving money throughout the year is making sure you check your budget and keep an eye on how much you spend before Christmas hits.
It’s easy to get caught up in the season and overspend without realizing it.
The best time to save money is before Christmas hits.
Here are some Christmas Shopping Tips to remember.
Make a list of people who would like gifts
Check out sales at stores around town
Buy gift cards for stores where you know people shop
Make your gifts more personal by decorating them yourself
Avoid the guilt of overspending on Christmas with these ideas to make your next holiday a little more affordable
The key to saving money throughout the year is making sure you check your budget and keep an eye on how much you spend.
It’s easy to get caught up in the season and overspend without realizing it.
My Christmas Gift Shopping on a Budget Went over
Yikes, this is exactly what you didn’t want to do. But, the temptation to keep grabbing a couple of things was too much.
We all have the best of intentions, but may find themselves going over your budget when Christmas shopping. You need to keep things in perspective when this happens.
The key is not to go too far over Christmas budget.
If you spent more than planned on one or two people on your Christmas list, then you can recoup this by purchasing less expensive gifts than planned for a few other people to compensate.
Don’t throw in the towel and give up completely when Christmas gift shopping on a tight budget.
What are your favorite for christmas shopping Tips?
Whether you are looking to figure out how can I do Christmas cheap? Or just to save a few extra dollars with these money saving tips?
In this post, we covered the best ways to be prepared for Christmas shopping on a budget.
But, don’t just stop there, use these tips to improve your money management all year around.
Saving extra money just for Christmas is one of the frugal living tips you can start with. Starting in January, stick around Money Bliss and learn a few more ways to improve your money situation.
You won’t regret learning budgeting tips for Christmas. That will change your finances forever.
More Christmas Shopping Money Saving Ideas:
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Are you ready to save money in advance for Christmas this year? Then, you are in the right place.
With this Christmas Budget Challenge, you will be prepared for holiday spending and not be scrambling at the last minute.
Get prepared for a debt free Christmas!
Tired of overspending? This challenge is perfect for you.
Tired of the post-Christmas debt hangover? This is exactly what you need.
The Christmas Budget Challenge is wonderful for someone who wants to take control of their life both their time and their money. Plus enjoy a debt free holiday season!
In 2019, the average family spent $900 on Christmas, according to Statista. Do you have $900 lying around for just Christmas gifts, decor, food and any other miscellaneous Christmas items?
Be honest with yourself.
If the answer is no, don’t fret. That is probably 90% of society. Keep reading and you can change that.
In order to have a debt free Christmas, you must save up in advance and plan your Christmas budget.
If the statistics hold true, then collectively over one trillion will be spent on the holiday season. So, you need to be prepared for next Christmas.
Remember, saving money is setting money aside today to be used for a future purpose.
So, what are the tips and tricks on how to have a debt free Christmas?
We want a Debt Free Christmas!
In order to have less stress around Christmas, the goal is to fund your Christmas money envelopes the week of November 1st.
That way you have plenty of time to shop around, get the best deals, and be the first one with wrapped presents.
Let’s talk about Christmas money envelopes… They are the perfect place to put your cash so you have money saved when the holiday comes. No paying on credit cards and having the January debt hangover.
If you prefer an online option, then use a savings builder account.
We want a debt free holiday season!
Even a smaller holiday that you can afford is better than a huge holiday that you can’t afford. Period.
Please note… Just because you may finish your Christmas shopping early, doesn’t mean it is a free pass to keep spending on those last minute items. That will wreck every Christmas budget.
Download the Christmas Budget Tracker and Gift Planner now.
Celebrate a debt free Christmas
It’s that time of the year again. The Christmas budget is looming and you’re scrambling to find a way to pay for it, or at least limit how much it will cost.
Christmas is a time of giving, family fellowship, and memories.
Christmas is not an unexpected expense.
You don’t want to be stressed or worry about how you are going to pay for it.
Debt Free Christmas tips: Plan ahead and use these money saving tips.
How to have a Debt Free Christmas
Christmas is financial stress and debt, but there are ways to plan for it so that you can have a debt-free Christmas. By saving up now, you will be able to afford the things you want without having to worry about repaying loans in January.
You need these debt-free holiday tips in your life! This is exactly how to enjoy Christmas with no money – specifically NO DEBT.
A debt free Christmas!
Also, once you enjoy living a debt free Christmas, you have learned many of the millionaire habits that will help you all year round.
1. Save Up Money Early
The sooner you start saving for Christmas, the better off you will be when the holiday gets closer.
As with any of our money saving challenges, it takes a little discipline to set money aside for a specific purpose and only use it for that purpose.
Shortly, we will go into detail on how much money to save based on your budget for Christmas.
In our household, we have a sinking fund that each month we add a pre-determined amount towards. It is a lean $50 per month because we prefer a minimalist home and choose experiences over gifts.
2. Implement the 3 Gift Rule
This is the best way to make a minimalist Christmas a possibility by limiting the number of gifts each person gets – especially the kids.
Let’s be honest… so times, it is hard to limit ourselves to only buying a few items.
With the 3 gift rule at Christmas, you are able to stay with your Christmas budget. Plus you will be able to buy high-quality gifts instead of purchasing a bunch of small gifts (to make it seem like you are making Christmas gift-giving bigger and better).
For our household, our 3 gift rules follow this:
Something to wear
Something to read
And don’t forget the fun!
3. Plan Ahead
There are two ways to plan ahead.
First, use our Christmas Budget template to help you decide how much you need to spend and how much you can spend. This will help you to plan in advance the best gifts for your loved ones.
Second, to shop off-season or on clearance. Our perfect example was our oldest needed new snowpants, so I bought them in June for the upcoming winter. I paid pennies compared to the retail price and had an awesome much-wanted present.
By planning ahead, it will also take off much of the stress that you are experiencing around the festive holiday parties.
4. Pick Your Traditions
Have you ever considered which traditions are your favorites? Which do you do because they are your traditions even if you don’t enjoy them and they are costly?
One year, I decided to poll my own family on their favorite family traditions. Their top five list were all things that were frugal, didn’t cost much money, or were volunteering to help others.
This is where family politics can become friction between families.
You have to choose what works for you and your family and your budget. (Not theirs!)
5. Be Brave and Say No
Let’s face it. Saying no is hard and sometimes isn’t fun.
But, you desire a debt free Christmas more than anything else this year.
Your personal financial future is more important than spending money you don’t have.
Quick example: you are invited to 5 parties with family and/or co-workers. Each party has a $20 gift limit for each person attending. So, you are dropping $200 as a couple on parties that aren’t your first priority.
It is okay to opt-out of gift exchanges. Be clear with your reasons and tame their expectations of you.
Make it is time to find a community that shares some of the same money values as you!
Christmas Budget Challenge for a Debt Free Christmas
All of the Christmas Budget Challenges will be based on the average Christmas budget each year. (That number from above is based on average spending.) Just remember that number is a collective of gifts, food, decorations, and any miscellaneous holiday items.
Because every family and their personal finance situation is unique, we will break this Christmas Budget challenge up into various spending levels.
You choose which will work best for your family.
Related Resource: 8 Simple Tips to Stay on Budget at Christmas
Let’s discuss how these numbers we decided on for the Christmas Budget Challenge. First, the average family spent $900 on Christmas in 2019, according to Statista. Regardless of whether you think that number is jaw-dropping high or way too low. That was the average amount spent. Those are the statistics.
So, for this challenge to have a debt free Christmas, we are going to break that into three different levels.
Christmas Budget Challenges Levels:
Average Christmas Budget – $900
Frugal Christmas Budget – $450
Luxury Christmas Budget – $1,800
Just a side note…The average spending of $900 at Christmas includes amounts put on credit cards that weren’t able to be fully paid off.
The goal is to save $900 by the week of November 1st. (Don’t worry about counting weeks. The key dates and weeks are listed below.)
That means saving money for Christmas weekly.
This challenge is about having a debt-free Christmas and holiday season.
Don’t think it is possible to have a fabulous holiday season without debt?
Let me tell you… IT IS POSSIBLE!
We have done it each and every year. There is no post-hangover stress or guilt on how much was spent.
Also, makes sure to check the end of the post for the dates for 2020!
Average Christmas Budget – $900
For the first challenge, we are going to be average. Plain, old average. Nothing fancy here. Also, we are assuming the average spending is the same as the average Christmas budget.
We are making the assumption that you plan to spend the average amount as each American family did in 2017.
Average Plan
Weekly Amount to Save
44 Weeks
$20
30 Weeks
$30
23 Weeks
$40
18 Weeks
$50
15 Weeks
$60
9 Weeks
$100
Frugal Christmas Budget – $450
Next, the frugal Christmas budget is half of the average amount spent on the holidays. A fabulous Christmas put together for under $450. Personally, we have always limited the number of gifts.
Think outside the (Amazon) box!
Or take on a frugal lifestyle or thrifty lifestyle.
Simplicity is key.
Frugal Budget
Weekly Amount to Save
44 Weeks
$10
30 Weeks
$15
23 Weeks
$20
18 Weeks
$25
15 Weeks
$30
9 Weeks
$50
Luxury Christmas Budget – $1,800
Lastly, the luxury Christmas budget is for someone who has the capability to spend more and wants to make sure it is done without debt. By saving in advance, there are so many more options available when the holidays roll around.
You plan to save $1,800 for the holiday season.
Luxury Plan
Weekly Amount to Save
44 Weeks
$40
30 Weeks
$60
23 Weeks
$80
18 Weeks
$100
15 Weeks
$120
9 Weeks
$200
Key Dates:
Based on when you are reading this post will determine how much to start saving by date.
Don’t just pin this post later… be prepared!!
52 Week Savings Plan: November 1st 40 Week Savings Plan: January 25th 30 Week Savings Plan: April 5th 23 Week Savings Plan: May 24th 18 Week Savings Plan: June 28th 15 Week Savings Plan: July 19th 9 Week Savings Plan: August 30th
Download the Christmas Budget Tracker and Gift Planner now.
Where to Save Christmas Money
Now, it is one thing to say, “I’m going to start saving money for Christmas this year.”
It is completely different to actually act on it.
The BIG recommendation is to get it outside your temptation to spend!!
There are two options on where to save your Christmas budget money.
Savings Option 1 –
The first option is an online account.
Personally, this is my favorite. Simple reason on why. It is harder to access the money (it takes 2-3 days for the money to be transferred back to your local bank account). Plus, it is simple to set up an automatic transfer and forget. Then, money is set aside in a separate account until you need the funds.
Every month, we add the same amount to our sinking fund.
Savings Option 2 –
The second option is to use a cash envelope.
This one comes with the temptation to dive into the money set aside for a debt free Christmas. Personally, I think the prettier the envelope, the likelihood to actually use it goes up, too.
Check out the list of Best Cash Envelopes. Pick up your Christmas money envelope now!
Large family: How to have a debt-free Christmas
In order to avoid a debt-free Christmas, you need to start the year by saving your first paycheck. The rest of the money from that point on went towards Christmas expenses and was budgeted for that holiday.
The key is you cannot spend money set aside for this purpose.
By doing this, you are able to have an exciting Christmas without any debts.
Still, stressed about giving the best gifts for your large family? Here are great gift ideas that are affordable and thoughtful.
Enjoy These Debt Free Holiday Tips?
That is a bunch of simple and easy tips to make sure you learn how to have a debt free Christmas!
Are you up for the challenge? Make this year your first debt-free holiday season.
Start saving now in order to have a debt free Christmas.
And enjoy a stress-free holiday!
More Christmas Resources for you!
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Understand how much extra income you could get from a side hustle like DoorDash and get a budgeting and investing basics refresh.
This Week in Your Money: How much extra money can you really make from side hustles? What are budgeting and early investment strategies for young professionals? Hosts Sean Pyles and Sara Rathner discuss the realities of gig economy jobs with Tommy Tindall, a NerdWallet writer who tried working for DoorDash to see what kind of income it would give him. He shares tips and tricks on the ease of starting with DoorDash, the practical challenges involved, and how your location and lifestyle can impact your earnings.
Today’s Money Question: Host Elizabeth Ayoola joins Sean and Sara to help answer a listener question from a recent college graduate about early investment strategies. They discuss how young professionals can apply the 50/30/20 rule to their finances, the importance of setting clear savings goals, and how to start investing at a young age. They discuss the benefits of starting investments early, the differences between active and passive investing options, and the importance of automating investments to build wealth over time.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Have you ever gotten a food delivery or a ride in an Uber and wondered whether these gigs are really worth the effort as a side hustle? Well, this episode will deliver some answers.
Sara Rathner:
Cute. Welcome to NerdWallet’s Smart Money Podcast. I’m Sara Rathner.
Sean Pyles:
And I’m Sean Pyles. This episode, Sara and I are joined by our co-host, Elizabeth Ayoola, to answer a listener’s question about money goals, especially when you’re early on in your financial journey. How do you get a grip on your finances and set yourself up for long-term success?
Sara Rathner:
But first, we’re turning to side hustles. This month on Smart Money, we’re running a special series about how you can increase your income, whether you want more money to invest or you’re working on building up your savings, or you really just want some extra cash to spend on whatever junk appears in your social media feeds.
Sean Pyles:
And we are not here to judge you for whatever you spend your money on, but watch any social media influencer or read any article about ways to increase your income and inevitably someone mentions taking up a part-time job in the gig economy like Uber, DoorDash, Airbnb, take your pick. And I’ve always been pretty skeptical that these gigs will net you meaningful amounts of cash, especially considering all the time and effort involved.
Sara Rathner:
Absolutely. If you’re going to put miles on your car or let strangers sleep in your rental property, it needs to be worth it. And we don’t have access to a vacation house for the purposes of this podcast, but we do have a Nerd on staff at NerdWallet who actually did DoorDash for a couple of days to get a feel for whether these jobs live up to the hype. Tommy Tindall is here to share his insights with us. Tommy, welcome back to Smart Money.
Tommy Tindall:
Hey there. Thanks for having me.
Sean Pyles:
So Tommy, you recently made a really fun video for NerdWallet’s YouTube channel where you test drove DoorDash for a few days. What were your hopes and expectations going into this journalistic exercise?
Tommy Tindall:
Yeah, so I study and write quite a bit about side hustles and for this one, I really wanted to go the extra mile, get it, and test it out myself, try to make the advice a little more valuable, right? Give it a true test. And delivery driving is super popular and seemingly accessible, at least that’s what I thought, was my hypothesis, I should say, an easy way to make side money. So I really wanted to answer a couple questions that I think people have about a gig like this, and one is just how easy is it to get started? Can you really sign up on your phone, get a red bag in the mail and start driving? And spoiler alert, yes, that’s what I did. You can. And also can you make real money?
Sean Pyles:
Okay, so what were the main things that you were tracking as you weighed whether this side hustle was worth it?
Tommy Tindall:
I wanted to keep it easy, so I was just keeping a close eye on the time I spent driving while delivering, the miles I drove, and of course how much I earned and really wanted to get to what’s the real pay when you factor in the cost of driving.
Sara Rathner:
So talk with us a little bit about the experience of doing this. Was it fun? Was it boring? Did you get chased by any wild animals? Did you use this as an opportunity to catch up on episodes of Smart Money?
Tommy Tindall:
Well, I wanted it to be fun, but it was kind of hectic. I mean, I remember there were a couple moments of zen where I was just cruising, windows down, just looking outside thinking this is the life. But as soon as I started thinking that way, ding, ding, I’d get another delivery. And I think hustle is a real good term for this because it was kind of a grind. And what really got me, which I thought was interesting, was the constant interaction with my phone. It was draining. I was using maps to navigate, to take orders, and it was just a lot of interaction with the phone while driving.
At one point I, quick story had a 16-mile delivery, which was good pay. It was like $18 of base pay, which was really good. So I took it, but I was so distracted kind of trying to figure out where I was going, that I went the wrong way on 95 and was screaming, pounding the wheel, as you can imagine, and just like, efficiency. That’s what I was going for. Also, keep in mind, I was filming this experience for the video and that totally added to my stress. So maybe more practice without trying to film myself, I could be a little more efficient, get a little more time to enjoy solitude and catch up on my favorite podcasts like this one. But yeah, it was hectic.
Sean Pyles:
Yeah. But you can’t forget that this is a job, right? It’s going to have stressful, difficult moments like any job.
Tommy Tindall:
I was reminded of that quickly, that this is a job and I kind of felt the stress. When I would get a delivery, I wanted to make sure the food was hot and get there quickly, know where I was going. So I had that sense of, hey, you’re on the clock, you’re working.
Sara Rathner:
That distracted driving element is also pretty terrifying.
Sean Pyles:
Tommy Tindall:
Yeah. Now when I see people on the road, I’m wondering are they delivering right now? So before I yell “get off your phone,” I’m wondering that.
Sara Rathner:
Sean Pyles:
Sara Rathner:
They might be.
Sean Pyles:
Either way, get off your phone.
Tommy Tindall:
Sara Rathner:
Tommy Tindall:
Sara Rathner:
I know. So Tommy, you mentioned this in your video, you live in a smaller town, a more remote area. How does that affect your ability to make money from DoorDash or any other app-based job like this?
Tommy Tindall:
I mean, it matters a lot because it’s how busy it’s going to be around you. So location matters. It’s where you live, which towns you have access to with a short drive that may be more populated. So I live, it’s a smaller, more rural but kind of suburban town outside of Baltimore. And what I did before I started was I would watch the DoorDash app, the map section of the app and just kind of see where the hotspots were.
And of course areas closer to Baltimore where it’s more densely populated, more restaurants within close proximity of each other, they were regularly busy during the peak times and they were shaded in pink on the maps. That’s how you know you can go out. When the map is like pink or red, you can Dash on a whim. When it’s gray, which it was sometimes in my town, you have to wait or schedule a Dash for later. But luckily where I live during the busier lunch hour, the option to Dash now was available during the weekday when I tried this. So I was able to stay closer to home, which I think was more realistic, because if I did this, I don’t think I’d want to drive that far. I’d want to stay closer to home, so.
Sean Pyles:
You don’t want to have to commute for your side gig.
Tommy Tindall:
Exactly. You want to get out there and do it maybe on the lunch hour during work, which I was thinking, which we’ll talk about. Probably kind of hard to do because I did find myself going from one end of my town to another because it’s not that populated, so it cost me some time.
Sean Pyles:
Well, that also makes me think about wear and tear on your vehicle and other related expenses like gas. Was that a worry of yours as you were doing the side hustle?
Tommy Tindall:
Yeah, this was a big worry for me because I am somebody who loves cars and I can be a little obsessive about keeping our vehicles maintained. So just all the stop and go driving, it was just kind of giving me a nervous tick. That was on my mind the whole time. I think I kind of make that clear in the video a little bit, and I should also mention that I drive a full size Ram pickup truck, which I thought would be fun to test for this, but not the ideal gig economy vehicle. It’s inefficient, hard to maneuver.
Sean Pyles:
Yeah, lots of storage space, but maybe more than you need for a Starbucks run or something like that.
Tommy Tindall:
Oh, yeah. And the maneuverability. I think at one point I pulled off a busy road into the wrong driveway and I had to sort of Austin Powers my way out. You remember that 20 point turn he had to do in the first movie and all while the customer, the next house over was watching me. So when I finally got over there, we had a little laugh about it and I think she did tip me. I don’t know if she tipped me after the fact or not, which you can do in the app.
Sean Pyles:
You were providing some entertainment along with the delivery?
Tommy Tindall:
Oh, yeah. When I did get to interact with customers like that, I made it kind of fun. I’d be like, “Yeah, you don’t see people driving a truck very often, do you?” But yeah, I was a little anxious about my own vehicle and the wear and tear.
Sean Pyles:
Okay, so Tommy, after three days of Dashing, tell us how much time you spent driving, how far you drove, and how much you earned.
Tommy Tindall:
All right, well here are the stats. I went on three Dashes for this test and drove about six and a half hours on deliveries altogether. I put 90 miles on my personal vehicle, which was my big dump truck as I mentioned. Earned a total of $86, but factor in the 17 MPG that I was getting. And gas was I think around $3.60 a gallon when I was doing this. So less than $19 in fuel costs. True earnings are more like $67 or $10.31 cents an hour. So I mean, not a lot of money.
Sean Pyles:
So I’m going to wager that’s less than you’re making at NerdWallet on an hourly basis.
Tommy Tindall:
Yeah, yeah, yeah. Not giving up the main hustle.
Sean Pyles:
Yeah. Do you think this was worth it?
Tommy Tindall:
So yes and no, and I’ll start by saying I’m glad gigs like this exist because I was really blown away by the accessibility of this gig. I mean, I was signed up and through the background check in literal minutes, and if you, the listener, meets the basic qualifications, I mean you can probably start working and start earning, and I like that. It’s not like saying side hustle options, go be an influencer and wait a couple years to build a following before you make your first dollar. I mean, you sign up and you can make money, which I think is great. And flexibility of course is the selling point of a delivery driving job like this. But at the expense of what? I felt like I was really hustling. I didn’t make a lot of money and thinking back, I mean this would be a real grind for me to do on the side.
It’s really about where I’m in my life. I mean, I have a main job, I have a family, I have young kids in school and sports, a home that continues to break that I have to maintain, I serve in my church and I really covet kind of that little free time that I have left. So I guess all that to say, not quitting my day job. And I think doing this made me more grateful of my main hustle and reminded me that I think there’s merit in what’s become kind of an older way of thinking where you find a good company, work hard, build your skills, grow your confidence, gain expertise, and hopefully increase your salary over time. So whether it’s worth it I think depends on personal situation, because you do make money.
Sara Rathner:
So who do you think a side hustle like this is good for?
Tommy Tindall:
People who do have some extra time or need extra cash and can take advantage of the flexibility to work whenever, because again, that is the selling point of a job like this. Also people who can work the system to their advantage. And you see a lot of YouTube videos of people sort of gaming this and chasing something called peak pay, which is an incentive where you can add plus one, two, three, or more dollars to a delivery if it’s really busy. So the competitive types, which is not me, admittedly, but I do wonder if I would’ve tried this at a different time in my life, like back in college or in my first years working a job when I lived in Washington, DC, had it been available.
Sean Pyles:
Well, Tommy Tindall, thanks so much for talking with us.
Tommy Tindall:
Absolutely. Thanks for having me.
Sean Pyles:
So listener, you just heard Tommy describe an interesting way that he earned some money. Ahead of this month’s series about increasing your income, we have our new Nerdy question of the month for July, which is: what is the most creative thing that you’ve done to earn more money? Maybe you negotiated a significant raise or you’re one of those job hoppers that has a new gig every couple of years. Tell us what is the most interesting thing that you’ve done to increase your income?
Sara Rathner:
I mean, I’ve rented out my basement for a commercial shoot, so there’s that.
Sean Pyles:
Okay. Interesting.
Sara Rathner:
Made 1,400 bucks and bought new storm doors. What a day. Anyway, if you’ve done something like that or something else, call or text us on the Nerd Hotline at (901) 730-6373. That’s (901) 730-NERD, or email us at [email protected]. We might just share your story on a future episode. Maybe inspire some of our other listeners to take up an interesting side hustle.
Sean Pyles:
And while you’re at it, send us your money questions, too. It is our job as Nerds to answer whatever your money question is. So send it our way on the Nerd Hotline, (901) 730-6373 or email it to us at [email protected]. Well now let’s get into this episode’s money question segment after a quick break. Stay with us. We’re back and answering your money questions to help you make smarter financial decisions. This episode’s question comes from Adrian, who left us a voicemail. Here it is.
I’m a recent college graduate. I graduated college in June of 2023 and I am six months into my new corporate world job. I’m trying to save 25% of my income per month and I’m trying to start investing. I don’t really know what my savings goals should be. I’m down for some high risk investments, but I don’t know, I’m trying to just learn the basics of investing, how to plan for life. What would you do if you were in my shoes, if you could go back in time and be 23 and not have kids or a mortgage or anything?
Sara Rathner:
To help us answer Adrian’s question on this episode of the podcast, Sean and I are joined by our co-host, Elizabeth Ayoola. Hey Elizabeth.
Elizabethy Ayoola:
Hey, my favorite dynamic duo.
Sean Pyles:
I love getting a question from a listener who is so young because even though they’re only 10 years younger than me, it does feel like a lifetime ago that I was 23 and making these financial decisions for the very first time. One thing that I find really interesting about Adrian’s question is that while they are so early in their financial journey, their questions really can apply to anyone, because as I’m sure we all know well, plenty of people in their 30s and 40s and beyond are still trying to figure out their budgets and their financial goals. So with that in mind, I think that our listener and all listeners really could benefit from a little bit of budgeting 101. So Elizabeth, where do you think they should start?
Elizabethy Ayoola:
Basically, I think they need to start with a budget. That’s going to tell you how to slice and dice your money. You should probably maybe start with the 50/30/20 budget, which we are advocates for at NerdWallet, or it might be the 60/30/10 budget depending on your cost of living and where you are. Now, for those who don’t know what the 50/30/20 budget is, 50% go to your needs, 30% to your wants and 20% to debt, paying down debt and also saving money. I do think it’s important to know, however, these numbers are not set in stone. It really just depends on your finances and you can adjust the numbers to fit where you are in your financial life right now. I myself currently save above that 20 bucket, but luckily I don’t have that much debt, so that’s why I’m able to save more money and save more than the 20.
Sean Pyles:
Yeah. And our listener wants to save 25% of their income, which is really ambitious, especially for someone who is so young. I think when I was 23, I was saving maybe 2% of my budget, and it wasn’t even intentionally, it was just by chance, because that’s what I had left over at the end of the month.
Elizabethy Ayoola:
You were doing great, Sean, because let me tell you, I was saving 0% of my budget at 20 something. So that is ambitious. I think it’s possible, but it just again depends on where your finances are.
Sara Rathner:
I like an ambitious savings goal, especially when you’re young. Some of the best advice I was given by a CFP that I used to work with was save as aggressively as you can for as long as you can because life only gets more complicated and more expensive. So if aggressive for you is 3%, that’s great. If aggressive for you is 25%, that’s great, and if you have to change it up from month to month, that’s fine too.
Elizabethy Ayoola:
So our listener is dedicated to being a hardcore saver, and I love that for you, listener. So Sean, I know you’re also big on saving and you have some tricks for effectively saving money. What do you think?
Sean Pyles:
So I would start by encouraging Adrian to have something to save for. Again, I’m thinking a lot about myself in my early 20s, I didn’t really have any sort of short, medium, or long-term goals or priorities of any sort because I was just focusing on paying my rent and having fun. So I understand how it can be hard to understand what your priorities might be, and this is where I think something that’s very woo woo but effective can come into play. And that is a visualization exercise. Now, if you’re rolling your eyes, just bear with me because I swear it can be super helpful. So when you are 23, 33, 43, think about where you see yourself in the future in five years, in one year, in 20 years. So maybe that means do you want to move to a new city in the next year? Do you want to buy a house in five years? Do you want to retire in 40 years? Imagine where you will be at these different points in your life and think about how you can save money to get there.
Elizabethy Ayoola:
I would not even say that’s woo woo, Sean. I mean, so I definitely started doing that in my late 20s and honestly, the life I have today was a lot of the woo woo stuff. So it worked for me.
Sean Pyles:
The manifesting is real.
Elizabethy Ayoola:
It’s a real thing.
Sara Rathner:
And if you’re not really into the whole idea of manifesting as a term, that’s fine too. You could also think about it in terms of just naming your goals. Instead of just being like, I’m going to save 25% of my salary. For what? So say what the “what” is. So maybe online savings accounts like high yield savings accounts, you could actually name the account. So you could have, this is the account because I need to replace my car, or this is the account because I need to buy a new computer. Or this is the account that I’m saving up for a down payment on a home for. And then beginning to say, okay, I’m going to put this amount of money in this month for this goal and this goal. Makes it so much easier to stay organized and there’s some science behind it, making it so that you actually are more successful in terms of reaching your savings goals by just naming the goal. So if you don’t want to do the woo woo thing, you could do the practical thing and just put some names on stuff.
Sean Pyles:
Yeah. And what you’re talking about there is really the marriage of the woo woo and the super practical and tactical, where you can start with knowing what you want and then getting the accounts that can help you save the money for that. So for a lot of people, that’s going to mean starting out with an emergency fund, building up over time three to six months of the needs budget that you have. That’s like rent and medicine and groceries, things like that. And then building out the other savings buckets for things like a vacation fund, a house fund, a wedding fund. I have 10 savings accounts across all of the banks that I partner with. And they are all specifically allocated for my different goals. I know 10 is kind of a ridiculous amount, but it works for me.
And what makes it easy is that I automate my deposits into these accounts. So I don’t even have to think about it. One of my accounts is only getting $40 a month, and that’s enough for me to save, to build on that goal over time. But I don’t have to be worried about, oh, okay, am I going to have enough for when I need a new rug for my house eventually. I just know it’s already going in the background.
Sara Rathner:
Yeah, I love this. It’s that concept of reverse budgeting where you automate transfers into your various accounts for different goals every month.
Sean Pyles:
And whenever we talk about savings accounts, it can be easy for we Nerds who are steep in this to maybe even take for granted the fact that high yield savings accounts are such an amazing thing for people to have. People can be getting even around 5% back for what they have sitting in their savings. And if you think about some average returns from the stock market some years are around 7%, and that can be much riskier than just having a savings account. I really do recommend people shop around, look at some of our roundups on NerdWallet and see what sort of high yield savings account might help you meet your goals, because you’ll be getting a much greater return on your money than you would get from a traditional brick and mortar bank.
Sara Rathner:
So our listener, Adrian, is a spring chicken in the world of finance and in the world of investing, which they also mention, having a long time horizon can be one of your best assets. And if you’re in your 30s and listening to this, you still have a long time horizon. So don’t think it’s all over if you didn’t invest in your 30s. Now let’s talk about investing at a younger age. Elizabeth, what are your thoughts there?
Elizabethy Ayoola:
Oh my gosh. I totally get the feeling of being overwhelmed and not understanding where to start. But it’s really important I think, not to let that paralyze you and to just start as soon as you can. And the first step in doing that is creating a strategy. And what the strategy is going to do is it’s going to tell you what your goals are and how much you need to save to achieve them and by what timeline. Now, it doesn’t have to be over complicated because I think that’s where people get tripped up, especially because there’s so many retirement and saving calculators online to help with this. And yes, I’m going to shamelessly plug NerdWallet. We have lots of those, go check them out. But yeah, knowing what age that you want to retire and how much you need will help guide your investing strategy. It’s also going to help you decide what to invest in, the best vehicles to use, and how much to put in each. What do you think, Sara, about time horizons in that sense?
Sara Rathner:
Oh, it’s probably one of the best things you have working for you because the way compound interest works mathematically is the longer of a time horizon you have, the less you can save per month or per year and still come out with a higher amount of money in the end versus waiting an extra 10 years, an extra 15 years, then you have to invest so much more per month just to catch up and still end up with less money overall.
Sean Pyles:
And I would recommend Adrian or anyone else who’s getting started in investing or just taking it seriously for the first time, is to get a lay of the land and understand all of the different investment accounts that are out there. Because there are all these different ones, like a 401k and a Roth and a Roth IRA that people have probably heard about, but really understanding what they are and when one is more beneficial than another for your circumstances can help you make the most of your investments. And something to think about too, since Adrian is so young, is that your younger years are often the best time to take advantage of an IRA because you are getting taxed at a lower rate when you’re earning less money than you will be taxed at later on in your career. So really use these early years to your advantage.
Elizabethy Ayoola:
Yeah, I’m with you Sean. You guys also should decide for those people listening whether you want to do active or passive investing. If you are like me and you ain’t got time for that, and when I say that, I mean checking the stock market every day, then you may want to consider passive investing and some passive investing options include ETFs or robo-advisors and kind of securities like that. But yeah, once you do all those things, the most fun part is automating your investments and knowing that you’re probably growing both while you’re sleeping.
Sean Pyles:
Yeah, I think for a lot of people, sometimes the best strategy to start can be the strategy of “I want my money to make me more money.” And that’s where I started out in my mid 20s when I first started taking investing seriously. I didn’t want to spend a lot of time actively managing investments. And guess what? Actively managed investments often perform worse than passively managed investments. So passive is probably going to be the easiest thing for most people to do. And I just set up an account with a robo-advisor that was trusted and well-reviewed on nerdwallet.com, and I just have automated deposits and it makes it super simple. I’ve been doing it for years and I’m already receiving literal and metaphorical dividends from that.
Elizabethy Ayoola:
Also, you want to think about fees when you’re looking at things like that and what has low fees and performance and other things, but don’t let that stop or overwhelm you as well. Just check out some resources on how to pick an ETF also.
Sara Rathner:
Yeah, I will also add that whenever I hear somebody in their early 20s say that they are, “Down for some high risk investments,” I think somebody’s been talking to their friends about crypto and I don’t know. I mean, for all I know Adrian just means, oh, I really want to dabble in a more stock forward portfolio. Sure. Honestly, you’re probably talking about crypto, aren’t you? Before you dabble in speculative investments, things like cryptocurrency, things like, I don’t know, precious metals and real estate and all sorts of stuff like that, you want to set aside a solid foundation. Just the things that we’ve been talking about, automating transfers of money into retirement accounts, either through your employer or on your own, diversifying those investments. And then, only then, if you have money left over, then you can dabble a little bit, sprinkle a little spice onto your investments, maybe 10% of your portfolio at the most into the higher risk, like crazy stuff. But set a good foundation first. Don’t put all of your money into speculative investments and then wonder why you don’t have any money left because you probably won’t.
Sean Pyles:
And I will just quickly add for the sake of our compliance department, that we are not financial or investment advisors. If you want specific individualized investment advice, speak with a financial advisor, hopefully a fiduciary financial advisor. Okay. Now, I know we’ve been kind of talking around this question for this conversation, but I would love to hear what you two would have done differently if you could go back to when you were 23 and maybe improve your finances, knowing all that you know now?
Elizabethy Ayoola:
That’s a deep, deep, deep sigh. So honestly speaking, the first thing I thought is like, oh my God, I would’ve stopped partying and buying alcohol and save more money. But then I remembered that I was living in Nigeria earning like $400 a month, which was seen as a good salary. So I barely had any money to live, quite frankly. And I think that’s a reminder that sometimes you just ain’t got really barely enough money to save and you just need to earn more. But I definitely would have educated myself more on personal finance and I would’ve at least stashed away something into an investing account. So that’s what I would’ve done. But then again, if I started investing too early, I might be in Turks and Caicos right now instead of chatting to you all. So I guess it worked out how it was supposed to.
Sean Pyles:
I’m glad you’re here with us, but also I would be happy for you if you were traveling the world instead of doing this. Sara, what about you?
Sara Rathner:
So I think a lot of people in their early 20s are, there’s just a lot of fear and uncertainty at that point in your life, and I definitely felt that at that time where there are all these big life milestones that are coming up for you eventually and you just don’t know when they’re going to happen. And so I was so worried about whether or not I’d be able to get to that point. But you’re 23.
Knowing how fast the next 10 to 20 years will go for you, just savor it because everything else is going to pile on really, really fast. And the way you spend your weekends is going to look really different. Do take a couple of steps to improve your position in life later on and use that gift of time. But then, yeah, you should have the wants budget, you should go travel with your friends, go out with your friends. Once you all get partnered up, you’re not going to see your friends as often, so enjoy it.
Sean Pyles:
Well, as someone who definitely enjoyed themselves a lot in their early 20s, I don’t regret any of it, really, shockingly, but it did come at the expense of my financial health in some senses. I really didn’t invest until my mid 20s. I barely had a budget until around the same time. So I would go back and encourage myself to be a little bit more balanced in the having fun and the forward planning aspect of life. But you’ve got to learn your lessons as you learn them. And that’s where I was at the time.
And one thing I think is important to realize and think about as you are trying to map out what having an adult financial life looks like is that the beginning of this financial journey is always going to be the hardest because you simply don’t know what you don’t know. There’s so much to learn. When you’re 23, you’re paying rent on your own for the first time. You’re figuring out how to make meals for yourself for the first time and building these good habits does take time. So don’t feel like you have to do everything all at once, but do make that concerted goodwill effort to try to better your relationship with money and use it to build the life that you want. Well, Elizabeth, thanks so much for coming on and talking with us.
Elizabethy Ayoola:
Thanks for having me.
Sara Rathner:
And that’s all we have for this episode. Remember, we’re here for you, whatever life phase you’re in, and we want to hear your real world questions because we’re here to make you smarter about your money decisions. So turn to the Nerds and call or text us your questions at (901) 730-6373. That’s (901) 730-NERD. You could also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode.
Sean Pyles:
And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts and iHeartRadio, to automatically download new episodes. This episode was produced by me. Tess Vigeland helped with editing. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all their help. And here’s our brief disclaimer again. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sara Rathner:
And with that said, until next time, turn to Nerds.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Saving money is key.
If you have been around Money Bliss long enough, you realize the importance of saving money. If you are brand new here, welcome we are happy to have you.
Either way you are going to learn something important. In fact, what you are going to learn today will be transformational. (guaranteed)
Saving money is the long term key to financial success.
But, you may be thinking, I am living paycheck to paycheck. Well, that may the case now, however, if you stick around long enough that life that is your norm now won’t be your norm later.
We strive for you to find success with money. That place you aren’t constantly worried and stressing about paying bills.
You need to learn how to save money.
This goes beyond the question of “What percent should be savings?”
Your savings percentage today will dictate your decisions tomorrow.
That statement may seem overwhelming, but it definitely shouldn’t it. Shaving extra savings as a percentage of income is completely doable, and more than likely, you probably won’t even notice.
Money Bliss will help get you to the life you dream of…promise.
So first, let’s figure out how much of your income should you save every month?
How Much To Save Monthly
The traditional recommendations from financial experts have you saving 20% a year.
Even when you look at our Cents Plan Formula, you will see we recommend to save 20% each year. However, when you look closer, you notice we recommend to save greater than 20%.
Those words “save greater than” are key to long term success and financial independence.
The traditional recommendation of the 50-30-20 rule is wrong and very outdated. That breaks down into 50% on basic expenses, 30% discretionary (or fun spending), and 20% saving. Maybe it worked well when everyone had a pension in retirement, but social security isn’t enough for many people to survive.
You need to save money each month. But, how much to save monthly is dependent on many more factors.
How much to save monthly depends on your:
Current personal finance situation
Your lifestyle
Your spending habits
Desire to retire earlier
What season of life you are in
Your ability to save more money (ie: debt is out of the picture)
Your income
By giving you a flat dollar amount to save, it wouldn’t be based on you.
This is about your money journey and how much to save monthly depends on you, your money goals, and your financial decisions. Everyone will have a different savings ratio based on their life choicesx.
Is saving $500 a month enough?
If you are young and swaddled in debt, then saving $500 a month is a milestone.
If you desire to stay living paycheck to paycheck cycle, then that isn’t enough to save each month.
However, don’t get down on yourself, if you haven’t ever saved $500 or can only save $500 a month. That is a great starting point if you are just starting out saving money monthly.
We will discuss shorting a better tool on how much of your income should you save every month.
What is Saving Percentage?
Saving percentage is a great way to know how much you are saving overall.
This is when you decide on how much to save monthly based on your income. It is the most personal way for you to decide how much you should save each month.
Written as an equation, this is how you determine your savings ratio based on your income.
Saving percentage = (your overall savings divided by your overall income) * 100
That equation will give you your savings percentage.
Example #1: you saved $7,000 in the last 12 months and your income was $85,000.
(7,000 / 85,000) * 100% = 8.23%
Example #2: you saved $22,000 in the last 12 months and your income was $155,000.
(22,000 / 155,000) * 100% = 14.19%
Should I Base My Savings On Gross or Net Income
Honestly, it doesn’t matter either way. You can choose to base your savings percentage number on gross income or net income. Just make sure to stay consistent and calculate it either way.
Whichever way you choose, you want the savings percentage to increase year over year.
If you use gross income, your saving percentage will be lower because taxes will take a big chunk out of your total percentage.
If you use net income, your savings ratio will be much higher because taxes aren’t included.
Personally, I calculate our savings percentage on gross income since there are ways to lower your tax bill. For instance, by moving to a lower cost of living area.
Why Saving Percentage is a Better Tool
When you look at the retirement rules of thumb (rule of 4 and multiply by 25), you may feel a little bit overwhelmed with the prospect of saving money. However, if you just keep increasing your savings percentage you will get there without all of the sterss.
Remember, slow and steady always wins the race.
So, instead of using retirement guidelines on how much to save monthly, there is another tool that will help you stay on track and not give up.
Use your saving percentage.
Each year you want to increase your saving percentage.
You can do the same thing for monthly when starting your savings percentage journey.
This is something manageable where you can see real results. Stay focused on the percentage. Keep your head down and keep saving away.
That is why your saving percentage is a better tool.
What Percent Should You Save Of Your Income?
This is something we detailed in the Money Bliss Budgeting method found here.
You need to start with how much you want to save this year.
Need motivation, then check out the Money Bliss 52 week money saving challenges or the monthly money saving challenges.
If you are out of debt, then you need to start with a 20% savings percentage. That is the first thing you do is save money from each paycheck. Then, you figure out how to live on the remaining money.
If you are still struggling with debt, then you need an emergency fund in place until you are debt free except your mortgage. Any debt will always hold you back from your full potential and a higher savings percentage. There is too much drag holding you back.
The more you are able to save today will change your financial future tomorrow.
Each year, evaluate how much you can increase your saving percentage. Can you reach 30%, 40% or maybe even 50%?
Savings Percentage in Real Life Examples
Okay, now that we have laid out all of the above information, let’s tie them together into one.
So, is saving 10% enough? No.
Well, what about saving 30 percent of income? Maybe given your age.
Meet Anna
Anna makes $4000 per month or $48,000 per year. She is 25 years old and plans to save a percentage of her income for the next forty years.
Anna
Income is $4000 per month
How Much to Save Monthly
Total Saved
Balance at Age 65
10%
$4000 x 10%
$400
$192,000
$1,288,432
15%
$4000 x 15%
$600
$288,000
$1,932,648
20%
$4000 x 20%
$800
$384,000
$2,576,863
30%
$4000 x 30%
$1200
$576,000
$3,865,295
Assumption of 8% rate of return. No inflation and doesn’t account for taxes.
Assuming no increase in income, Anna will give her a nice nest egg for retirement.
She is right where she needs to be for how much should I have saved by age 25.
Meet Sue & Joe
Sue and Joe feel very behind the game in saving money. They realized lifestyle creep invaded their family life and now are cutting expenses and prioritizing saving money.
This couple with kids makes a combined income of $150,000. They are both 34 and want to see how soon they will be millionaires.
Sue & Joe
Income is $12,500 per month
How Much to Save Monthly
Total Saved
Balance at Age 60
10%
$12,500 x 10%
$1,250
$390,000
$1,288,432
15%
$12,500 x 15%
$1,875
$585,000
$1,864,020
20%
$12,500 x 20%
$2,500
$780,000
$2,485,360
30%
$12,500 x 30%
$3,750
$1,170,000
$3,728,040
Assumption of 8% rate of return. No inflation and doesn’t account for taxes.
Obviously, the more you save, the faster you will watch your account balance grow. If Sue and Joe chose to save 30% of their income, they would reach millionaire status in 13 years or at age 47.
If they saved only 10% of their income, they would be 58 years old when they reach their first million dollars.
Sue and Joe are behind in how much should I have saved by 30.
Meet Brian
Brian is sick and tired of the rat race of working. He doesn’t love his job in his degree field, but it pays well. He wants to save for 10 years and move on with life.
Brian makes $105,000 per year.
Brian
Income is $8,750 per month
How Much to Save Monthly
Total Saved
Balance after 10 years
20%
$8,750 x 20%
$1,750
$210,000
$315,217
30%
$8,750 x 30%
$2,625
$315,000
$472,826
40%
$8,750 x 40%
$3,500
$420,000
$630,435
50%
$8,750 x 50%
$4,375
$525,000
$788,044
Assumption of 8% rate of return. No inflation and doesn’t account for taxes.
Brian realizes he has to save a higher savings percentage each month if he wants to leave his job and take a lower paying job that he enjoys.
He decides that he will save 40% of his salary over the next 10 years, then leaves his nest egg alone for another 15 years. His saving efforts should pay off and will net him around the $2 million dollar mark.
Savings Percentage Calculator
Are you ready to figure out your saving percentage?
Grab a calculator and figure out how much you are saving in the following ways:
Emergency Fund
Rainy Day Fund
Retirement (401k, Roth IRA, or IRA)
Health Savings Account
Other savings accounts
Without downloading our free spreadsheet in our free resource library, you can figure this out very simply with a pen, paper, and calculator.
Add up all of your savings and divide that number by your income.
For instance, you are saving $1200 each month and your income is $5000.
$1200 / 5000 = .24 or 24% savings percentage rate
How Much Do You Save a Month?
Wow! That is a lot of useful information.
Personally, I wish someone would have discussed the concept of saving based on income percentages. It just simplifies how to save money on a consistent basis.
Your savings percentage is a great way to track your financial progress!
In conclusion, there is no right or wrong number to save each month.
Your personal litmus test is to increase your savings percentage month over month, year over year.
Don’t forget to download our spreadsheet to help you with quick calculations!
Up Next:
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.