In 2018, I saved just under 50% of my income (before taxes).
I did it while working part-time and making what most Americans would consider a modest middle-class income (in other words, nowhere close to six figures).
I also did it while traveling full-time and living in a mix of places not known for being cheap (like New York City, France, and Switzerland) and places with a more reasonable pricing reputation (like Romania, Hungary, and Croatia).
When the year was over, I shared some of the practical details here. How I make my living. What I did to market my business throughout the year. How I make freelance writing work while traveling full-time.
And after I shared those details, I got an email asking for more.
Because it’s not just the practical details that matter here, right? There are mindsets and lifestyle choices at play. It’s not just what kind of work did you do to make enough money to live and save. It’s also how do you think about a goal like this? In a world where more than half of Americans surveyed can’t handle a $1,000 emergency, how do we learn how to save?
Now, there are a lot of resources out there designed to teach us just that. How to save. You’ve got Mr. Money Mustache leading a charge toward financial independence and early retirement through frugality. You’ve got Sarah Von Bargen talking about putting your money where your happy is—and saving money by not buying things that don’t bring you joy. And there are a thousand other resources out there (though the two above are the ones that most resonate with me).
But since someone asked me to chime in, to tell my own story of saving 50% of my income, to dig deeper into the mindsets that got me there, today I’m going to do just that.
(Psst, this post may contain affiliate links, which means if you purchase something through one of my links, I get a commission at no extra cost to you.)
The Personality of a Saver
When that reader first asked me to elaborate on money mindset, I looked at Chad and shrugged. How do I define something that’s so ingrained in my life? How do I tell someone where I started when I don’t remember all the turning points? What is it that drives my spending and saving habits, really? I make intentional decisions about my finances on a micro level, but what are the deeper mindsets that drive that decision-making?
It took me months of mulling to come up with some answers. Because there are so many factors at play with how we see and treat our money. Personality. Upbringing. Habits. Choices. External circumstances.
So, I suppose this is a caveat. A pause before I unpack my own thinking about money. A place to say that some people are naturally frugal. Some aren’t. Some people have to dig out of a deeper hole because of life circumstances. Some come into the race three steps ahead. Some figure it out young. Others figure it out later.
I fall somewhere in the middle. I’m naturally frugal to a point, but I’ve also been intentional over the last 10 years or so about changing my money mindsets, saving more, and working toward financial independence.
Saving as a Game
Now, I don’t mean it’s an actual game. Obviously, the stakes are high. If you don’t save, you can’t retire. You can’t handle emergencies. You may doom yourself to working long past when you really can or should.
What I mean here is that I’m an extremely competitive person. I love puzzles. I love challenges. I love setting my mind to something and figuring it out. And I love winning.
Now, when people talk about being competitive, they tend to talk about it in the context of other people. But that’s not what I mean here. I couldn’t care less if you can write a novel faster than me, beat me in a footrace, or out-earn and out-save me.
What I do mean is this: I’m competitive with myself. I like setting goals that seem just out of reach and trying to reach them. I like having something to work toward. I like seeing if I can hike just one more switchback or save 5% more next month or beat whatever my record is.
And this is how I’ve been treating my savings.
Instead of just setting budgets and sticking to them or using tools to track my spending (though I do track my spending), I treat it like a competition with myself.
How low can I go?
Now, this doesn’t mean I’m denying myself things that bring me joy. But I am constantly getting creative with saving. Is there a way to get the same benefit for no money or less money? Are there free resources that can replace that paid one? Is there a way to haggle down price? Can I make something at home instead of buying? Is it available at a secondhand store? Can I buy it in a higher quality at a higher price now so that I never have to replace it? Is there a way to make more money with the same or less effort?
What Does Getting Creative with Saving Mean?
Okay, so what do I mean by getting creative with saving? I tend to take on one or two things at a time and here are a few examples:
Razors. A year or so ago, I started side-eyeing razors. I was bothered with how much money I was spending on them and how much waste I was creating. So I started asking around. Were straight razors still a thing? Was there another way?
The answer was something I’d never heard of: Safety razors. You buy a handle and occasionally replace the blade (but not with a blade packaged in a bunch of unnecessary plastic and you don’t need to replace them nearly as often) and—et voila—you’ve got your razor needs covered. I went from spending probably about $15 per month to spending $15 on a handle (this is the one I bought) and something like 50 cents per blade (and a blade lasts me several months at least).
Some simple math leads me to believe I went from spending $120 to $180 per year ($10 to $15 per month) on razors to spending a couple bucks per year. That’s $180 that can go toward an emergency or move me a step or two closer to retirement. Without factoring in any investments or return on that money, if I budget $2,000 per month (that’s about $66 per day), $180 per year represents just under three days of budget. Which means every year, this silly little bit of savings means I could retire three days early.
Three days isn’t a big leap. But my time is a lot more precious to me than disposable razors and I’ll happily trade them in for three extra days of freedom per year.
Phone. As some of you know, I live phone free. I haven’t had one in 5+ years. I ditched my phone for a number of reasons, but one of them was that it was a high-cost item to keep around and it brought me approximately 0 joy. Now I use a combination of Skype, Google Voice, Zoom, and a free phone app for texting.
It costs me maybe $5 per year. Compare that to the cheapest phone plan I’ve seen (Google Fi), which costs $20 per month (not including the phone purchase itself). And this saves me $235 per year.
Eating out. Chad and I eat out often. Food is something I get a lot of joy from, so it’s not something we scrimp on. But. Restaurants tend to serve big portions. Portions big enough, we’ve found, for two. So when we eat out, we order for one and share.
There are lots of other things I do—some small, like using the library’s printing services instead of a print shop; some big, like haggling our Airbnb prices down—but here’s the point: I actively work at not assuming that any of my spending is a given.
I need to eat, but do I need to eat the things I do in the way I do? I need a roof over my head, but do I need one in X exact location or with X exact amenities even if it costs more?
Sometimes the answers are yes. Eating local, organic food when possible is important to me, and I’m happy to spend more to do it. I’d spend more to live in a quiet apartment instead of one over a noisy bar. And you can pry my fancy Michelin-starred dinners from my cold, dead fingers.
I’m not saying that I always choose the cheaper road. Very often I don’t.
I’m also not saying everyone should live like me. Lots of people love their phones and the cost is worth it to them. An expense I can live without might be one you might feel miserable without. My choices are not for everyone. They’re not prescriptive.
What I am saying is that I question my choices continually. I change course often. And I recognize the cost of my choices. There are a thousand ways I could live cheaper. I could move to a place like Mexico or Cambodia or Bosnia and Herzegovina. I could stop eating out. I could buy cheap hiking shoes that give me blisters instead of the expensive ones that don’t.
The point is that I’m weighing the trade-offs, ever asking myself how low can I go without sacrificing the things that actually bring me joy?
My Budget and Income Aren’t Tied Together
If there’s only one thing you remember from this post, this is probably the one:
My budget and my income are two very separate things.
Now, what do I mean by that?
I mean that when my income goes up, my budget doesn’t.
If my income went down, my budget might need to. But, for me, getting a raise doesn’t mean living larger. It means saving more.
When I left Denver, Colorado, in 2012 to travel full-time, my monthly budget was $2,000. Seven years later, that’s still my budget.
Budget isn’t about how much I get to spend. It’s about how much I think I need to spend to live a life that I love. If it goes up, it does so because I actually need more money to live—because I’ve chosen a more expensive place to base or because inflation has forced me to re-evaluate what I need—not because I raised my rates or got a new client.
Which brings me to another point…
My Budget isn’t a Goal
I’m not trying to spend $2,000 a month.
I’m trying to see how much lower I can go while still maintaining my quality of life.
Now, here’s the part where I should say that I wasn’t always this way. I’ve always been a saver. I’ve mostly tended toward frugal.
I also remember how I saw my budgets when I first started traveling. On my first overseas trip (to Australia in my teen years), I gave myself $100 for souvenirs and I spent every penny. Not because I found something so spectacular I just had to have it, but because that’s how much money I had to spend and I was going to find all the things I liked most and take them home.
On my second international trip (southern Africa), I was even more ridiculous. I think I gave myself $200—and I had to work to spend it all because everything I found was so darn cheap. I was charmed by it all, but I had no filter except the cap on my budget. I ended up going home with two jam-packed check bags and three carry-ons.
Now, things are very different for me. My budget isn’t a goal number. If I spend $1,800 in a month, that doesn’t mean I have $200 of fun money to go buy something or do something. It means I came in under budget (yay, hooray!) and can save $200 toward emergencies or retirement.
If there’s something I want to buy or do, I assess it on its own terms. Do I need it? Will it make my life truly better in some way? My purchase is based first on whether I need it, whether I’ll use it, how it will impact my life. Then I ask whether I have the budget to spend on it.
For me, it’s been a total reversal of the mindset of teenage traveling me. And I honestly don’t know when exactly it changed. But budgets are no longer goals to hit.
I Don’t Live in the US
Finally, it’s important to remember that I don’t live in the US. If I did, my overall budget would have gone up a bit. That doesn’t mean you can’t save in the US, but it does mean that my personal savings rate for a comparable quality of life would be higher.
There are a few reasons for this. One is that rental prices in the States tend to run higher than rental prices in most of Europe (with the exception, perhaps, or very high-cost cities like London, Amsterdam, or Zurich). My Paris apartments, for instance, always come in cheaper than the New York rentals.
Another reason is healthcare. The cheapest plan I could find (as a freelancer with pre-existing mental health conditions) that would cover emergencies in the US was $500 per month. My cost while I’m abroad is less than $200 per month.
A third big reason is transportation. My cost of having a car in the States was significantly more per month than my cost of using buses and trains to get around Europe.
Does this mean you can’t save like a fiend and live in the States? Not at all. One of my best friends just knocked out almost $400,000 in student loans. She lives in a high cost-of-living town in Arizona.
But this is to say that my choice to travel and spend my time in Europe is part of the reason I personally can save at a higher rate while making a modest income and working part-time.
The Income Side of the Equation
Of course, all of the above is about mindset and saving. And the other half of that equation is income. So part of saving high percentages of your yearly income is always going to come down to making enough to save.
The strategies behind this will depend on whether you’re full-time of freelance, what industry you’re in, what experience level you’re at, etc. But part of what set me up for success last year was simply this: I started charging more.
I got serious about raising my rates a couple years ago when a health situation made me decide to cut my working hours in half. I was nervous about it, but the logic that pushed me forward was this: Even if less clients were willing to pay senior-level rates, the math still worked. Charging 25% more meant I didn’t need as many billable hours to hit my minimums.
At first, that’s really all that happened. I made about the same amount of money, but I worked less hours, was happier and healthier. And then, as the work started to increase, so did my income and so did my ability to save at higher levels.
50% in 2018; 75% in 2019
I think those are some of the core beliefs and mindsets that led to my success last year in saving nearly 50% of my income (before taxes). And that success, alongside my increasingly stable business, emboldened me to reach for an even more ambitious goal.
In 2019, my new goal is to save 75% of my income. We shall see how it goes.
So now, to you…
Any saving tips or money mindset tips to share? Drop them in the comments.