Saving Half of My Income – Take Two

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?

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17 Responses to Saving Half of My Income – Take Two

  1. My wife and I were able to save and invest a ton of money when we first moved in together. I’m glad you’re keeping track of those savings, because otherwise we tend to fritter them away. Congrats on your upcoming marriage.

  2. A second income will definitely help out those numbers. Congrats again on the engagement and upcoming wedding. Any honeymoon plans yet?

    • No honeymoon plans yet, but we’re narrowing down our list of possible destinations. Looking at all these tropical locations in the dead of winter feels like torture at this point, but I hope it will be worth it when the time comes!

  3. Moneycone says:

    Hey 2 incomes is better than one! Hope you do achieve your goals this year and some!

  4. Saving half of income is a great goal, and one that while I can’t currently do, I think would do most people wonders. Save as much as possible as early as possible in life, and let compounding work some magic.

  5. Michelle says:

    Living off of two incomes makes life a lot easier! I hope 2014 is a year of savings for you :)

  6. FatChance says:

    2013 Goal=no spending on credit card and no borrowing of any kind. I ended up using my cc 3 times in 2013. Each time was because my debit card was not where I thought it was at point of sale. I sent in my payment within 24 hours each of the 3 times so I consider this goal a success.

    2014 Goal=reduce spending by $12,000 over 2013 spend.

    This should be obtainable. I took 2 international vacations and 4 domestic vacations in 2013. I ‘only’ plan on 3 domestic trips in 2014. I also bought a car for my daughter in 2013 and do not plan to do that again this year. If you take $$ into saving divided by gross income, I should hit 50% savings rate. It is hard to say what the saving rate over net income is when so much comes out for 401K, ESPP, HSA etc.

    I wish all of your readers a financially fantastic 2014. May all your goals be met!

    • I like doing all my spending on credit cards. I pay them off each month and collect the cash back. I think they’re very beneficial tools as long as you don’t carry a balance from month to month.

      I wish I could have taken 6 trips and purchased a car in 2013! It sounds like you should be able to meet your goal just by not doing all that again this year, but you never know what will come up.

      Best of luck reaching your goal, I hope 2014 treats us all well :)

  7. Integrator says:

    Congrats on doing so well on the savings rate. When we were double income pre kids, 50%+ savings rate wasn’t uncommon. 2 kids later, we struggle to get much beyond 35% :)

  8. We are planning on saving close to 50% of our income as well. We are going to start planning for a family this year so all the money we can save this year will be important for keeping us on track when we have a larger family.

  9. First Million,

    Best of luck on your quest to save half of your combined income this year! I’ve been aiming for saving at least 50% of my net income for the past few years, and it’s in my ability to do so that has really propelled my wealth. If you’re saving half of your net income I think you’ll have a hard time not being incredibly wealthy one day.

    Best wishes!

  10. In tap water’s defence, bottled water is absolutely terrible for you and the environment, so you should probably switch to tap water (unless you live in an area where tap water is terrible, in which case get a Brita or something). Good luck on your goals!

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