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I have this long term goal of being able to save over 50% of our income. High I know, but if you want to achieve long term financial indepence, then the earlier you can live of 50%, or less, of your total income, then the quicker you will get there.
This is not about how much money you earn, but more about how much you spend. Living below you means, by living frugally, but not in deprivation, is the way to go. We still allow ourselves 10% of our income for fun; holidays, golf, general ‘go out and have a little fun stuff’, but when we do stuff we try to do it as frugally as possible. When we eat out it’s because we have a money off voucher, when we go on holiday we book flights and rooms as cheaply as possible and we self cater and walk everywhere.
At the moment we’re saving 30% of our income to fill our emergency fund. Once this is done, our big trip account is funded, and I’ve paid off the last of my consumer debt, we should, barring disaster, be able to get over the 50% mark.
How much of your budget do you allow for fun?
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50% is impressive, but you are right – no one ever got rich living paycheck to paycheck. We save 25% of a measley salary so I am happy with that for now.
The fact that I don’t know what percent we save, just shows you where I am in financial planning! I know that our mortgage is way above the recommended “percentage of income.” Once again, Laura, you’ve pushed me towards new financial skills. I’ll work on figuring out my percentage this month.
It’s all for fun! If it’s not fun, we’re not going to buy it!
Upon reflection, I will admit that our insurance bills (medical, auto, homeowners, liability) aren’t for fun–they’re an investment against catastrophe. But the rest of it? Pretty much all fun.
We have lots of fun at home, so our rent counts. We enjoy eating, so our grocery bill counts. We pretty much never drive anywhere except for fun, so our gasoline expenses count.
Okay, more big exception–paying taxes is no fun, although I suppose a small fraction of the money goes to parks and libraries and such. (Plus, going to prison would REALLY be no fun.) I’m not sure I could make the case that money spent on cleaning products brings much fun either.
Still, though, a general rule of “If it’s not fun, don’t buy it” seems like a good starting place (once you get out of debt).
My goal is to save 50% of my salary because I’m not a big fan of my job. I don’t mind working and like being busy, but accounting is just boring. I spend about 45% of my money paying on debt, retirement, and savings. 10 – 15% is for fun. The rest are expenses. I only budget montly so these numbers change!
I used to save 35% of my salary when I had a real job. As a grad student, I’m lucky to save $100/month (which is a little less than 10%).