When I started this blog, it was for a simple reason: my goal was to save half my income, and I thought it’d be interesting to write about.
While I’ve never shared exact numbers on my income, I like to think I’ve always been transparent about what has worked—and hasn’t—in terms of helping me hit that goal.
To be blunt, the reason I was ever able to save half my income was that my income increased.
Sure, the groundwork was laid by paying close attention to my spending and cutting unnecessary expenses, but those things were never going to get me to my goal on their own. When my income went up at my day job and through my side hustle, I was able to hit my goal of saving half my income for a solid eight months.
But I haven’t been saving half my income for almost two years now, and here’s why.
I don’t need to save half my income right now
When I set my goal to save half my income, that wasn’t actually the goal.
The goal was to save up enough for my half of a house down payment in just over a year—a lofty goal, even in our relatively affordable housing market. When I looked at my budget through the lens of how much I’d need to save per month to hit that goal without tanking my retirement savings or yet-to-be-funded emergency fund, it told me I’d need to stash away about half my take-home income in one savings account or another every month.
That goal—buying a house—was something I really wanted, so I made the numbers work and focused on both spending much less than we otherwise would have and increasing my income. For a short period of time, that intense focus was worth it to hit the goal.
Saving for savings’ sake isn’t sustainable
Once we bought our house, two things happened. One, we had a house! There was no longer a timeline or pressing need to save for a house.
And two, our expenses went up. The mortgage we took on was higher than our previous housing costs, and the bills and budgets we planned for the new house were higher too. On top of that, we also relaxed a bit in terms of spending, allocating more room in our budget for restaurants and coffees—because again, we were done saving for the house!
That’s not to say we stopped saving at all, especially since the house was quickly followed by a wedding we paid for in cash, so saving was very much still A Thing We Did. We just weren’t saving half our incomes to do it, mostly because we just didn’t want that much wedding.
And that’s all there is to it: We don’t save half of our incomes right now, because there’s nothing we want badly enough to make it happen.
Your goals should lead your financial decisions
All things being equal, spending money is easier than saving money. You get the things you want now, and more of them, if you spend your money, which is easier than not doing that—I think that’s pretty obvious.
That’s why saving for the sake of hitting an arbitrary number, like saving half of your income, is downright silly unless it’s in service of a larger goal. Saving more money is hard work: for me, it required paying a lot closer attention to my finances, changing a lot of behaviour over time, and putting in a lot of Actual Work to earn more money.
If I had been doing all of that just to hit a savings percentage? There’s no way I would have, point blank. It only worked because I really wanted to buy a house, and saving that much was how I could make it happen.
How to figure out how much you should be saving
That’s why I’m such an advocate of starting your budget with your goals, and working back from there. You look at how much you need to save to hit your goals on your ideal timeline, and see what’s leftover to cover your expenses.
Sadly, it’s not a magic bullet to increasing your savings rate, because after you go through that exercise, your real-life budget and expenses might be like “Oh hell no, you still have to pay rent even though you’re now saving for an epic vacation.” I know, because that’s what happened to me—after I started this blog, it took me a full 8 months to hit my 50% savings goal for the first time.
But if you lead with why you want to save more money, it’s much easier to test out new approaches and behaviours that might help you get there. Whether “there” is saving 50% of your income, or bumping your savings rate from 5% to 10%, finding ways to save more money that actually work for you and are in service of your actual goals is always going to be more sustainable.