Why Bert’s Aiming to Save 60% of His Income

About two months ago, Lanny wrote about why he aims to save 60% each month.  His article got me thinking about saving a large portion of my income and you know what, if his Italian self can do it – I can too!  See why I am now also aiming to save 60% of my income each month.

Save, saving

First things first.  Am I insane?  What am I getting myself into?  Those are the thoughts that continue to cross my mind as I read my first introduction over and over again.   But I know this will be good for me.  I am a terrible accountant, in the sense that I have never really monitored my expenses that closely.  Each month I look at my bank account and give it the “ish” test.  As I comb through my history, I know about how much salary/income and dividend income I received in the month, and about how much of that I spent.  I never know the exact amount, but I approximately know how much I make.   But is that good enough for me anymore?

To answer my last question, no.  For the first 24 years of my life (Okay, probably actually the last 8 since I started working.  24 just sounds better), I saved a lot of cash and focused on building a strong reserve.  But over the last couple of years, I have focused on building my income producing portfolio by purchasing dividend growth stocks.  Why?  Because I want to achieve financial freedom as soon as I can.  And man have I purchased a lot of stocks over the last two years, which has put a pretty large dent in my  capital reserves.  I’m not complaining; I’m just stating a fact.  As my reserves dwindle, I need to continue to find ways to turn cash into income producing assets.  As Lanny always says, there are two ways to increase your cash: either increase your income or decrease your expenses.  Hopefully both will come into play during the year, but I guarantee I can achieve the latter by turning my “ish” monthly expense analysis into a firm savings analysis.   I have become addicted to dividend growth investing and I need to continue to find the means to keep purchasing stocks.  There are a lot worse ways to spend my money, so I want to start turning some sunk costs into income producing assets.

There is one problem, as I mentioned before, I have never tracked my expenses and calculated a savings rate.  So I really don’t have a firm benchmark to monitor my progress.  If I had to guess, I would say that I save about 40%-50% of my income every month.  Recently this number has increased since I moved apartments and cutting my largest monthly expense (rent) in half.    So to develop a benchmark, I have begun to track my income and expenses for September.  With a lofty goal of 60% in mind, discovering my actual savings rate is critical so I can trim the red from my checking account.  I know where I stand in how much I save, but I’m not going to tell you just yet.  Where is the fun in that?  All I will say is that I have begun my journey towards saving 60% of my income and trying to save more than Lanny each month!  This is going to be a fun journey and I am going to learn an awful lot about myself and my spending habits, which hopefully dwindle and causes me to save more.  But I know I will be much better at living frugally and investing, ultimately becoming a better person.

Watch out Lanny.  You are no longer the only Dividend Diplomat taking the 60% Savings Challenge.  Who wants to join me?

Bert

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11 thoughts on “Why Bert’s Aiming to Save 60% of His Income

  1. Bert,

    Great challenge. I’m rooting for you!

    I hit 60% last year as an annual average, but it was tough. Requires carefully watching the budget pretty much all the time. But the end results are well worth it.

    I won’t be able to join you this year, as I’m having a tough time just hitting 50% after taking a massive pay cut to write for a living, but I’m cheering you on. 🙂

    Best regards.

    • Thanks DM. I am excited for the challenge. It will definitely be a new adventure for me and hopefully it won’t be too much of a culture shock. I am expecting this to be more of a slow and steady climb as opposed to a sudden spike to 60%. I’ll havea much better guess in a couple of days when I calculate my final savings rate and publish my results.

      50% is great. Just htink about that, even with a massive pay cut you were able to make the necessary changes to still find a way to save 50% of your income. Not too many people could say the same thing, so kudos to you! Hopefully you will be on your way to 60% in 2015!

      Thanks for stopping by.

      Bert

  2. My wife and I don’t quite hit the lofty 60% mark, but we do save a substantial portion of our income. I wish you the best as you pursue your 60% mark. Cutting your fixed living expenses in half will be a tremendous step in increasing your savings.

    • Time to shake off the rust Developer! Keep your eye on our website this weekend for more information about the Dividend Diplomat Savings Challenge. I’m glad you are onboard for the journey. The question is can you beat the Diplomats haha!

      Bert

  3. First time commenter, medium-term reader 🙂

    My advice: get on Mint.com immediately. I did this about 4 months ago because I was much like you in the regard I wasn’t in tune with my spending habits.

    Now I have budgets set up for all categories and I look forward to setting/changing any budgets each month (I know… sick, who gets off on budgeting?!?).

    Also something that doing this helps me with is avoiding being TOO frugal. Yes, it’s possible. I put budgets in for date nights for my wife and me, and a small monthly budget for gifts for her (e.g. flowers mostly). If at the end of the month I see I didn’t spend that money, it helps me realize that maybe I need to be more aware of doing things for her. It’s a win/win really.

    Best of luck on your 60% journey!

    • Thanks for commenting Travis! Don’t be a stranger, we love hearing our readers opinions! I have used Minth in the past, but I was not the biggest fan. I found it annoying/tedious to have to adjust all of the mis-categorized expenses. Maybe I was just being lazy with the set up and could have made it much easier on myself. It sounds like you have found a great way to track your expenses and the budgeting tool seems really cool. I agree, you need to include spending in your budgets. Being frugal is not the same as being cheap, which is something that I think gets lost in the shuffle. I am glad that you are still factoring in date nights and gifts for your wife because I do not believe that saving should get in the way of life experiences.

      Thanks again for stopping by and following. Hopefully we will hear back from you soon. Let us know how you progress each month as well!

      Bert

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