Last year I set one lofty financial goal for myself: to save half of my income. I was on track to reach my goal when I discovered that engagement rings are kind of expensive! In the end I saved about 35% of my income. Not a number to be upset over by any means, but still short of the goal I set for myself. As we head into this new year, I’m once again setting a goal of saving half of my income. But this time things will be different.
How you ask? Simple. This time around I’m working with two incomes!
My fiancé has always been great with saving money herself (probably better than I am to be honest), so as we head toward our wedding this summer we’ll be aiming to save half of our income along the way.
Now, I know what you’re thinking… “Jay, weddings are expensive! You’re just going to get thrown off track by that huge expense!”
Have no fear. Luckily we have most of the major wedding expenses already booked so we know exactly what they’ll be costing us. In addition, this year I’m coming armed with something I neglected last year…a plan.
Over the new year’s holiday we sat down and mapped out exactly how we’re going to reach our 50% goal and pay for a wedding at the same time. After importing both of our sets of financial accounts into Personal Capital we could analyze just how we spent as a couple (something we had never really looked at before).
After looking at our planned spending and our saving habits from the prior year we found that we’d need to find another $500/month in savings to meet our goal. I know that sounds like a ton of money, but because we had never really analyzed our combined spending before we found a ton of overlap. So here’s how we’re going to find that extra $500 per month in order to save half of our income this year.
- Groceries - While we’ve been living together for over a year now, we’ve been doing a good part of our grocery shopping separately. This lead to us spending close to $600 per month in groceries. I’m not saying we’re going to start living on ramen noodles and tap water, but by doing a better job of planning and combining our shopping habits we should be able to cut this down considerably. Estimated monthly savings: $150-200
- Dining Out - Every time I talk about saving money I talk about how much dining out I (we) do. We eat out twice a week every week without fail, sometimes more! By cutting down to once per week we can make a giant step towards cutting down our savings gap. Estimated monthly savings: $100-$150
- Cell Phones - While I’ve spent a lot of time talking about how I cut my phone bill in half by switching from Verizon to Straight Talk Wireless my lovely fiancé is still stuck paying $100 per month with a major carrier. Thankfully her contract is up in a few short months. At which time we’ll be switching her over to Straight Talk immediately! Estimated monthly savings: $45-50
- Other Discretionary Spending - If we stick to the bullets laid out above that should get us about 400 of the $500 per month we’re looking for. The other $100 will have to come from all of the other miscellaneous places we spend our money. Obviously it’s impossible to arbitrarily spend $100 less each month, so this portion is going to be accomplished by increasing our automatic transfers into savings. Because my finances are automated, I just have to increase the amount of my paycheck being deposited in my savings account each pay period and I (hopefully) won’t even notice it’s gone! Estimated monthly savings: $100
So that’s the plan! If we stick to the savings habits we’ve had for the last year, and focus on cutting back in the above areas we should be able to hit the goal of saving half our income this year!
Readers: What are your financial goals for the year? Is saving half your income part of the plan?