Are you a little intimidated by the Save Half challenge? I was too! Saving half of my meager take home income seemed like a far fetched dream. As a relatively new saver, the idea of putting away such a large amount by the end of the year seemed so impossible, daunting, and utterly fantastical.
Refusing to give up, I chopped that intimidating number down into bite sizes to make a dummy proof savings plan in 2014 and I’m dying to share!
My first step was cutting out non-necessities. Taking a look at monthly expenses and seeing what can be cut out. A quick way to do this is to list your monthly expenses in order by priority. Then go down the list and see how far you get before you hit half your monthly income. Seriously consider whether the remaining expenses on the list can be eliminated or reduced.
Make Financial Goals
My second step was deciding what money goals to achieve with that 50% and rank them in order from most to least important. I have three major financial goals this year: pay off student loan, max out Roth IRA [$5,500], and have 3 months salary in savings.
My 50% savings could cover my student loan, max out my Roth, but didn’t quite cover the entire 3 months savings goal. No worries though, I’ll finish stacking that up in 2015.
Create A Checklist
I made myself a no brainer checklist of payments to fulfill my monthly goal. The more structured the process the more likely you’ll satisfy each goal. Mine is broken down into two pay periods since I get paid bi-weekly. My tax return and odd months that I get paid 3 times will also be split 50/50. Need an example? Here’s a spreadsheet.
Half Monthly Take Home: $1500
|Pay Period 1||Pay Period 2||Monthly Goal|
|3 Months Savings||$100||$391||$491|
(Like me, this example couldn’t cover the whole 3 months salary savings goal. Don’t get discouraged there is always next year!)
Aren’t those numbers more tangible?! I’ve plugged in my own and use it as a checklist in my day planner. Every time I get paid I whip out my handy dandy 50% schedule and put money towards my monthly goals. Seeing this chart everyday helps me second guess each purchase. [Do I really need take out tonight? Probably not!]
Do The Hustle
I imagine you’re thinking, this is all well and good, but how do you expect to live with only one half of your income for expenses. LaTisha here at Young Finances said it best, you’ll likely need to earn more to save half. And that’s not a bad thing.
EVERYONE is capable of side hustling. Think about it. What are you good at? Do you have expertise that you could start charging for? To meet my goals I’m working on increasing marketing for my freelance services, applying to be a virtual Assistant, and trying affiliate advertising on my own blog.
Now over to you, are you participating in the Save Half challenge? What’s your plan to save half? Do you have a side hustle idea to share?
Click here to join the Save Half group on Facebook and make it your priority to save 50% of your income!