Home > 2015 > Personal Finance

How to Stash Half Your Income in Savings

Advertiser Disclosure Comments 0 Comments

It probably sounds impossible. It may even feel impossible. But increasing the percentage of your income that you put toward savings can pay off big time. Adding more money to your retirement can allow you to retire earlier or live a more lavish lifestyle in retirement. So before you set your long-term financial goals like the average person, consider setting aside more, maybe even half of your income for the future.

Create a New Budget

In order to save this much money, you will likely have to adjust your current spending habits and patterns. People tend to live and spend according to their salary, but it’s a good idea to create a budget that helps you live well below your means. This requires you to prioritize the future more than the present. We often hear of the 50/30/20 budget where you spend 50% of income on needs, 20% on financial goals like retirement or paying off debt and 30% on wants. So in the new breakdown, you will likely have to reduce both some needs and some wants.

Increase Income

One of the easiest ways to save more money is to make more money. By increasing your income, saving 50% won’t have as big an impact on your life. Consider asking for a raise, applying for a promotion or new job, getting a manageable part-time job or starting a side hustle where you earn money in your free time.

Decrease Housing Costs

You can also consider living somewhere more affordable because housing tends to be the largest portion of people’s budget. Choosing a home that costs less in rent or mortgage can really help you reach your goal.

Open a Special Savings Account

It can be a good idea to have separate accounts for different savings goals. For example, one for your emergency fund, one for your vacation fund and one for your home down payment. Whether you are planning to save 50% of your income for a short term to reach a specific goal or you plan to do this for the long term, forming a strategy can help.

Split Direct Deposit

If possible, you might want to talk to the payroll or human resources experts at your office to inquire about splitting your pay in half. Fifty percent of each paycheck can go where it does now (likely your checking account) and 50% can be assigned for your new savings account (an IRA, Roth IRA or savings account). Putting savings on autopilot can make it much easier to stick to your plan and be less tempted to break your own spending rules.

Track Progress

Even with the best intentions and a plan in place, sometimes things come up. Life happens. So it’s important to check your progress regularly — including any time you incur a financial change, like a raise, windfall or new mortgage. It’s a good idea to know your balance, and stay on top of how much you are paying in fees.

While it may not be easy, these tips can still motivate you to save more — whether that’s 50% of your income or another percentage that works for you.

More Money-Saving Reads:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team