Saving Half My Income on Less Than a Six-Figure Salary

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Everyone in New York is richer than you. Or so it seems.

Take today, for example: on my way to work I made note of all the usual signs of wealth. The latest Gucci fur mules on the subway. Twenty-three-year-old co-workers living alone in the Meatpacking district. Facebook friends posting pictures of dinners from Eleven Madison Park, a restaurant where the tasting menu costs almost $300 per person.

This is the norm, not the exception. Trust me, you get used to it.

But our perceptions don’t always get it right. Having a lot of nice stuff does not automatically equal “wealthy”. Because true wealth is not about how many Gucci loafers you have, or how fat your paycheck is—it’s about how much money you’re KEEPING. We all know people making amazing salaries but still living paycheck to paycheck.

So then, inquiring minds want to know: in an expensive city, if you have an average desk job, is it even possible to have a luxe lifestyle AND save at the same time?

Short answer: YES.

Today I’m breaking the ice on how I do money, because seriously, if no one ever talks about how they’re doing money then no one’s ever gonna get better at it. For the past year or so I’ve managed to save over 60% of my income, and here’s the breakdown on how I do it: no extreme couponing, reusing Ziploc bags or shopping bans in sight.

Everyone has a different way of defining savings rate. Here are the numbers and formula I use:

  • Savings = 401k contributions + Health Savings Account (HSA) contributions + Roth IRA + Other Investments + Cash Savings
  • Take-home pay = Gross pay – taxes
  • Savings Rate Formula* =
    ((Take-home pay – Spending) / (Take-home pay)) x 100
    Formula tweaked from Mr. Money Mustache.
    *I don’t count my employer contributions because I’ll only be fully vested after 5 years. As you can see below, I have a history of jumping ship within 3 years 🙂

My monthly spending generally looks like this**:

Monthly Spend Category
$950 Rent
$450 Food
$300 Travel
$170 Shopping
$95 Utilities
$70 Personal Care
$60 Home
$40 Gifts
$40 Entertainment
$33 Phone
$20 Alcohol/Bars

$2,228 Total Expenses
**Healthcare and commuting costs are paid with pre-tax monies.

Doing the math, I’m saving 61% of my income.

As for the actual percentage, here’s the funny thing: I never had an arbitrary savings amount in mind as a goal. Instead I approached it more like, “What’s the most I can save without sacrificing my lifestyle?” I kept saving until it hurt a little. Testing and tweaking is how I roll.

So, how do I do it?

Am I a financial unicorn who’s been saving since she was 15? Nope. Like most people I’ve spent entire paychecks on stuff I didn’t really care about. I didn’t start saving seriously until I was 26.
Am I making an insanely high salary? Nah, not part of the six-figure club yet. NYC is a bubble, and with median incomes between $45,000 and $134,000, here I’m solidly middle class.

Some of these things are a result of the choices I made; some are straight-up lucky breaks.

I don’t have debt.

When I was little, I didn’t know a single rich person. Since I didn’t have a template for being “rich”, and everyone around me was poor, I assumed I’d always be poor, too.  When I was a teenager I told my friend, “You know, I’m not going to be rich when I grow up, and I’ve totally accepted that.” I mean, I grew up without a ton of toys and little adult supervision, and I turned out fine, right? So when it came time to pick a college, and the private college I wanted to go to didn’t offer a full ride, I had no clue how I would pay for it. The private school did offer me a 75% scholarship, but my mom didn’t have much money, and I knew the loan amount would increase every year. I would have owed at least $40,000 after graduating, which sounded horrifying to 17-year-old me, especially as I knew a rich-person job wasn’t in the cards for me. So that’s how I ended up choosing a much less expensive in-state school. I remember crying in my bed because it seemed unfair I had to “settle” on college because of money. But looking back, I would have turned out OK no matter what school I went to. Even at my state school, I graduated with $17,000 in debt. I also racked up $6k of credit card debt, but both were paid off years ago.

I automate my savings.

When I got a paycheck, I used to pay everybody else first (credit cards, bills, etc.), and save for myself last. Now I do the exact opposite.

On the 15th and the 30th every month my paycheck lands in my checking account. I’ve set it up so on the 19th and the 4th, $925 automatically goes away into my savings and brokerage accounts. That’s $1,850 a month that I don’t see. You know that saying, ‘Outta sight, outta mind’? Well, it totally works. If I don’t see the money I don’t feel compelled to spend it. And I get to practice living on the smaller amount, over and over again. Over time, saving is just like muscle memory, where I don’t even have to think about it. It just gets done.

I refuse to spend what I can “afford” on rent.

I’m saving $1,000 without breaking a sweat. How?

Think about what your biggest money suck is each month. For most people, it’s rent. I’ve lived alone before, but when I moved to New York I always had roommates. While I valued the experience of living alone, I didn’t find it worth giving some faceless landlord an extra $1000 a month. When you ask old people their regrets in life, no one ever says, “I wish I didn’t have roommates when I was younger.’

I’ve seen it time and time again—people making less than me, yet spending more on rent. If you want to prioritize your living situation, that’s fine, but you have to make concessions somewhere else.

I looked on Craigslist just now, and in my old neighborhood a 1-bedroom costs about $2,000 a month.


But you know what sounds sweet? Saving $1,000 a month ends up being $12,000 A YEAR. That’s not chump change. Can you cut your Starbucks habit, $4 Korean face masks, and other small expenses to add up to over $12,000 a year?

Even now, sharing a space with my partner, we can “afford” to rent a place that’s twice as expensive, but we stay where we are because our savings is more important than having stainless steel appliances and a gym in the building. Because I focus on the big wins, I can bank $1,000 a month, easy.

I never stayed at a job for more than 3 years.

Pop quiz: what’s the quickest way to make $10,000? If you answered “negotiating your salary for a new job“, then you win a prize. It’s a million times easier to get a raise for a brand-new job than lobbying for one at your current job. I’ve gotten a raise 90% of the time—all you have to do is ask. And while I never left a job for money reasons per se, the pay bumps were definitely a nice byproduct of jumping ship.

I made a plan for my raises.

As my salary increased, so did my 401k contributions. Every time I got a raise, instead of thinking of what I’d buy next (OK, I’ll admit, there was a little lifestyle creep) I’d first fire up a little budget in Google docs. I’d go onto Paycheck City, calculate my new take-home pay, and then increase the 401k line item in my budget. Until it hurt. If you want to try to make your own, see below for an example of line items from an old budget I used.

Old Budget

I saved even when I wasn’t making much.

I’ve been saving for 8 years, and only about three years ago have I been able to bank more than half my income. Those other 5 years? Those were practice. When you first start doing something you can’t expect to get amazing results immediately. This is where a lot of people give up. It’s like how you’re not going to get a 6-pack just by hiring a personal trainer. You have to show up. And you have to do the work. The personal trainer, like the high salary, seems like a shortcut, and it can be, but really, the critical factor is the CONSISTENCY. For me, the work was starting at a $33,000 salary and saving 15%. Then making $38,000 and saving 20%, etc.

A few years ago, I told my roommate I started putting away $1,500 a month. I was making $54,000, with a couple thousand dollars in side hustle income. She said, “I don’t think I even HAVE $1,500 leftover each month to put away.” The truth is, depending on a number of things like salaries and healthcare, it might not be possible to save 50%. But instead of giving up and doing nothing, I figured out how much I COULD save instead. I wasn’t afraid to experiment: I tried 15% at first, then let it go a couple of pay cycles to see how it felt. If it was easy, I increased it until it hurt a little. And that’s how I found out my threshold. When it got to a point when I had to transfer money from my savings account to cover my credit card bills that’s when I knew I had two choices: either stop increasing my savings, or reduce my expenses.

I recognize that it will never be easier than it is right now.

Saving just to save isn’t going to get anyone far by itself. You’re gonna need a healthy dose of motivation. Here are a few of mine:
I have a sliver of a thought about having a baby some day. I look around and I see siblings and friends struggling with obscene childcare costs–in New York City I’m gonna need at least $24,000 a year. My brain started to connect the dots: baby = money. That tiny thought was enough to scare me straight. Where is that $24,000 going to come from when the time comes? Just drop out of the sky? If I don’t start saving for it now, then when? Because no one has time to figure out how to cut expenses when they’re focusing 24/7 on how to keep a new little human alive. I could tell myself I’ll figure it out when I get pregnant, but damn, 9 months is not an ideal amount of time to save. For me, if I need to save $24,000, then saving $700 a month for three years is way easier than saving $2,700 a month for 9 months.

I read this eye-opening article about a 46-year-old’s actual medical costs for cancer. And those are costs WITH insurance. Besides being a heart-breaking story, it goes to show that health issues can happen to anyone, regardless of age. Remember when Lance Armstrong got cancer? Yeah, if the fittest guy ever got sick, then I expect the same thing to happen to me. And money for healthcare is not just for me; I’d pony it up for someone I care about, no question.

The other day I got mad because the Internet wasn’t working on the subway. I’m single (for a few months more), with no kids or any health issues. I have ZERO real problems right now. The time for me to save is right now. Because it will never, ever get easier. Saving just gets more complicated as life happens. Because life WILL happen. And it has a funny way of happening at the least convenient times. And being prepared to handle almost anything financially? Well, that’s pretty priceless.

How much are you saving each month, and how did you make that happen?

Image: Unsplash

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