Is It Possible to Save 50%?

by Galia Gichon on June 6, 2011

A few weeks ago, Daily Worth, a personal finance site I contribute to, asked me to submit new fresh tips about saving money.  I submitted the following:

“Put 50% of each paycheck into a savings account right away. Then, use your debit card and your phone’s bank app to force you, in a gentle way, to live on only what’s in your checking. Try not to tap savings, and once a month distribute that cash to your emergency fund, IRA, other goals.”

Full article here: http://www.dailyworth.com/posts/730-3-Experts-Help-Grow-Your-Emergency-Fund


The responses were emotional and visceral.  They ranged from denial, anger and intrigue.  There were also tremendous positive responses thanking for the motivation and requests to work together to support change in their money habits.


If you peruse the personal finance books, sites and articles out there, everyone is telling you to save more, create an emergency savings account with at minimum 3 months of expenses, maximize your contributions to your ROTH IRA or increase the percentage saved to your 401k.  If you are living paycheck to paycheck; saving 50% might be an absolutely ludicrous suggestion!  Did this tip make you think, comment, deny or push yourself to do a little more than you are already doing?  Or perhaps you are living a truly budgeted life, but you are motivated to earn more.  Then my job was successful. However, if you are frozen or discouraged and can’t move ahead with your savings; don’t despair.  Stay with me on this exploratory path of moving towards saving 50% of your income.


Two Women Prove They Can Do It

Over the last year, I worked with two women, self employed and didn’t have much to show in savings. One of them carried a great deal of debt .  They were both in their 40’s and needed to radically change their money habits.  Over the course of a year working together, the plan of saving 50% of their income shook things quite a bit and changed their money situation for the better.  There were months they had to dip into the savings much more than they would have liked but overall, their growing savings helped them sleep better at night.  Plus they both agree that their life hasn’t changed that much, they just spend differently.  The only caveat is they both don’t have children, which as we know is a huge but wonderful drain on a family’s finances.


Save to Spend

When I first met MP Dunleavey, she introduced me to her idea of creating different categories, such as a save to spend savings account.  I really liked the idea of being organized and grouping each savings with a purpose! It made it more likely that you wouldn’t spend the savings group if you knew it were allotted towards something specific such as home repairs or summer vacation. It definitely got me thinking about saving 50%.


Shooting for the Moon

Lastly, an attendee and favorite client in my Simply Money seminar challenged me during one of my exercises.  Everyone was sharing their money goals, which were mostly saving an additional $200 per month.   She stood up and challenged us to reach for the moon.  She asked why we were setting our goals so low.  Her comments hit me hard and have stayed with me.  As a result, I challenge you to save 50%.  If that is too much, then shoot for 40%.  Push yourself and shake things up.  You will find that you are choosing to spend differently, spend your time differently and be more focused on following through with your money goals.

{ 1 comment… read it below or add one }

JP June 14, 2011 at 11:59 am

I think that was a great idea. I don’t think DW should have made an “retraction”. For all of us who can’t pay their bills, who live check to check, this suggestions should push them to make changes in their budget.

If you make 500 a month and your rent is 1000 then you need to move. If you can’t pay your bills you need to get a second or third job or cut your lifestyle.

When, not if, an emergency happens what would they do?

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