Recently, I did the math and realized I was saving just about 21% of my net income. While this is good considering my living situation, family expenses, and other factors, I thought it would be even better to increase my savings rate to 25%. However, without making major changes or sacrifices, I couldn’t just boost my savings to 25%.
Then, as if on cue, something happened in May that made this possible. It was something I had thought of months ago and considered, but not seriously enough. I am referring to my auto and home insurance. After getting a better deal and switching providers, I found myself paying exactly $100 less than before. Just like that, $100 was freed up in my budget. This followed a similar move in April when I switched my cell phone provider, freeing up another $50. These changes together were just enough to increase my savings rate from 21% to 25%.
But I am not done yet. While achieving a 25% savings rate was my short-term goal, my long-term goal is to reach a 30% savings rate of my net income. I aim to achieve this by my mid-40s, which thankfully is still a few years away, giving me time to adjust and make further changes.
In fact, at one point in my late 20s to early 30s, I was saving anywhere from 30% to 50% of my take-home pay. Then I got married, and family life made it harder to save. However, after career changes and increasing my salary over the years, while also stabilizing and reducing our family expenses, I have been able to gradually increase my savings rate. Just a few years ago, I was saving less than 15%. Since then, I increased my savings to 20%, then to 21%, and now to 25%.
As you may have noticed, this wouldn’t have been possible without first having an idea or goal in mind to increase my saving goal and working hard to achieve it. In fact, and as I do once or twice a year, I will go over my other bills to see what can be reduced. I am looking at you Rogers bill (Home Phone , High Speed Internet and TV)
Coming up next week, I will go over the details of what the did with this saving increase and what budget categories got this money. Hint: every penny went to either saving or investing and zero to personal spending or pleasure.
