Saving Over 50% Of My Post-Tax Income On A Middle Class Salary / by Pay Thyself

At the age of 15, I started my first job as a swim instructor for kids. My parents taught me that if I wanted anything, I needed to work for it. So that’s exactly what I did, worked to buy nice things and put money into my savings every so often. A valuable lesson I learned from my parents was not to accumulate debt. For years I didn’t have a credit card because my parents told me that if I didn’t pay it in full, I’d have to pay high interest. Till this day, I only have one.

Because I was a minor, my parents had access to my bank account. They’d hassle me about things I bought and how much money I spent. In their own way, they thought they were teaching me how to save more and spend less. Weirdly enough, one of my goals was to save $50,000 so I could buy a car in full or have enough for a down payment on a house.

Learning to manage my money

In the last 3 years, I’ve worked at 8 different jobs and made an annual income of $25,000. I struggled financially and that was something I wanted to change. Last year in April, I accepted a full-time job that provided a comfortable income and gave me the opportunity to max out my first 403b retirement account. It was the beginning of my early retirement journey but lots of changes still needed to be made. After reading, The Year of Less by Cait Flanders, I wanted to reduce my shopping habits. Lots of personal finance bloggers track their spendings, so I thought I’d give it a try. I bought Cait Flanders mindful budgeting planner and let’s just say it was a game changer.

The emotional experience of struggling financially for 3 years and years of working with nothing to show for made all the difference. I didn’t reduce my spending overnight and that’s okay because results don’t happen that way. I needed to create habits that would become second nature. Using the planner was my first step. I started in December, which was a terrible month because of the holidays. But by tracking daily and making it into a routine, I began to realize I was capable of saving more and spending less. In January, I saved $3,333.80, followed by $3,426.54 in February. These are huge accomplishments for me.

Spending less has become second nature. Whenever I want to buy something, I contemplate whether it’s worth it because there’s always a trade-off. In a weird way, I enjoy spending less and seeing my net worth grow.

The importance of sacrifice and keeping living costs low

My boyfriend and I live in the Bay Area where rent is ridiculous. Luckily for us, rent is split 3 ways (kind of) and it’s reasonable. We may not have the place to ourselves but it’s a sacrifice we make to get to our goal faster. Not only am I thankful for our living situation, but never having debt. My parents paid for my college tuition and if it wasn’t for them, I’d be thousands of dollars in debt. I think it’s important to be transparent about finances because everyone’s situation is different. So here’s mine.

I pay $600 in rent, $50 for my phone bill, $37.05 in subscriptions, $200 for groceries, and $90 (give or take) for gas. The rest of my spendings is budgeted for.

I spend an estimated total of $1,300-$1,600 per month, which is less than $20,000/year.

Spending less than I earn

I haven’t read Tanja Hester’s book, Work Optional: Retire Early The Non-Penny-Pinching Way, but I listened to the podcast that she did with Paula Pant about it. Tanja was able to retire early because she maintained the same standard of living, while steadily increasing her income (through promotions and raises) and saving/investing the difference.

Even after my income increased, I was able to maintain (and decrease) the same standard of living. Some changes I made where shopping less, cooking more at home, and tracking my daily spendings. I know exactly how much I spend each month, on what, and where. I’m working my way up the ladder to steadily increase my income and save the difference.

Having a supportive partner, friends, and family

When my boyfriend introduced me to FIRE (financial independence, retire early), I knew that it was the path I wanted take. As I got older, I couldn’t settle for one career path. I was undeclared for 2 years in college, until I realized I had a passion for Kinesiology, the study of human body movement. I may not have been passionate enough to become a physical therapist but personal training became a great side hustle.

I wanted to do numerous things without worrying about money and that’s what lead me to pursuing early retirement. And the best part is that my boyfriend and I are on the same journey. I get a tremendous amount of support from my friends and they’re always hyping me up. My parents are amazed at how much I save and even though they may not believe that I’ll be retiring around the same time as them, they still support me. I hope to become first generation millionaire in my family.

In conclusion

The things that have helped me save the most is keeping my living costs low (and/or the same), steadily increasing my income, setting up automatic contributions, and tracking my daily spendings. I don’t have debt or kids, but even on a middle class salary, I’m able to save over 50% of my post-tax income. I want to change the misconception that you need to make a six-figure salary in order to retire early and/or save.

We desire changes in our lives. We adapt-we grow-by making the right kinds of changes. All too often, however, we feel stuck. We’re doing the same things, making the same mistakes again and again. Do we wait for life to change us, or do we become agents of our own life changes?

Brett N. Steenbarger