The other day I shared on Instagram that my husband and I saved $190k last year…but here’s the thing I didn’t mention...we actually didn’t even earn that much in our day jobs...so WTF...how did we save more than we earn?...
DISCLAIMER**I want to identify that I realize I am in a privileged position financially so from now on I’m going to refer to things in percentages, so it doesn’t make you shrink and think “f** them, I’ll never be able to do that!” So I acknowledge we are blessed, but I also want you to realize you have untapped potential within yourself to create as much money as you’d like.**
So FIRST, it starts being about your savings rate.
What percentage of your income are you saving? You won’t ever be able to make more than you earn if you don’t save money to invest. My husband and I save 70% of our after-tax income. (So this percentage doesn’t include what goes into our 401ks.) If you want a breakdown on exactly how much we spend and where, my husband wrote a blog post on our expenses in January 2018. Trigger warning- there are numbers in there that show exactly how much we earned as well as how much we saved. Click here to read it. If you are interested in learning more about how important savings rate is, read this blog post to dive deeper.
My top tips on how to increase your savings rate
- Track everything. We use www.mint.com to categorize our expenses and every month we sit down to review our expenses for the prior month. We know exactly where each dollar we spent went.
- Figure out what your non-negotiables are and then eliminate all unnecessary expenses (this is super individualistic, but for us we eliminate essentially all eating out, shopping, Starbucks, etc)
- Get clear on your goals...it’s hard to stick to a budget and make sacrifices when there is no reason behind it. My husband and I had goals to quit our jobs and travel, be able to stay at home with our future kids, and live life on our own terms...so we kept that vision in our mind and it made making sacrifices a lot easier
- Find an accountability partner. My husband and I have a rule where if we ever want to spend more than $15, we have to ask the other person first. This makes it harder for us (aka me, he doesn’t really do this) to just spend money on amazon or online shopping. If you know your tendencies, put things in the way to make it harder for you to continue that habit.
Once you’ve increased your savings rate and are seeing that bank account balance go up, then it goes into being about how you can create more income for yourself through investments + opportunities
This is really where the mindset kicks in. Do you actually believe you have the potential to create as much money as you desire? Do you have a clear vision for yourself on who you want to become? Forget about who you are, focus blazingly on who you want to become...believe in your potential and it will happen for you.
So to get to what you came for, here is a breakdown of the approximate percentages of where all that f*ckin money came from:
20% - 401k + employer match
18% - real estate - we rent out the rooms in our house as well as have a partnership deal, can explain this more in a future blog post or podcast
10% - stock investments in total stock market funds like Vanguard’s VSTAX
5% - bitcoin; Matt started investing and trading bitcoin last year
47% - after tax savings from jobs, which we then funnel back into investments like VSTAX or Wealthfront. Click here to get your first $5,000 managed free through Wealthfront.
So 33% of our savings from last year came from investments and opportunities we took advantage of...NOT our 9-5 jobs...that’s a lot of money...approximately $62k...
So are you ready to take action on aligning your finances? I have a FREE workbook offer to help you get there:
Please note the Wealthfront link is an affiliate. If you choose to sign up for an account with them, I receive a small benefit.