How to Save Over Half Your Income

Saving for Early Retirement

Did you know that if you started saving and investing at least half your income right out of college, you could retire before the age of 40? Right now the average twenty something will work until the age of 67! You can chop that by 27 years to do whatever you want, just by applying this principle. Early retirement is well within the reach of most people if they take the correct steps, and that’s what I’m about to show you. If you want to strive for something greater to live a life you hadn’t thought possible, work hard now to save half your paycheck and you’ll love yourself later for it.

Check out this graph from networthify which shows you exactly when you can retire based on your current income, savings rate, portfolio value, and with a conservative 5% investment return rate. I projected an income of $36,000, saved half of it in the projection and was told that I’d be able to retire in 16.6 years. Also notice on the graph that it shows the current savings rate in India is 32% and China is 28%! The current savings rate in the United States according to the graph is 6%, which would take you 62 years to save enough for retirement!

Saving for Early Retirement

So how is it done? It comes down to two things. Cutting your expenses and/or raising your income.

Cut Your Expenses

If you’re making $50,000 or more as a guy without kids you should be able to save half your pre-tax income. According to a article by National Association of Colleges and Employers the average college grad in the class of 2015 has a starting salary of $50,651. Personally, I still live on less than half of that amount each year, and you can check out my budget here to learn exactly what I spend each month of basic expenses.

More Information on Cutting Your Expenses
I’ve written all about money saving topics, but here are some of the biggest ones that will help you chop your expenses.
-A breakdown of all my expenses and thoughts on each.
-Kill the cable bill and embrace apps.
-Never buy a new car and negotiate hard with the dealers.
-Negotiating a place to live, never pay more than $600 / year.
-Build a timeless Gentleman’s wardrobe for under $500.
-Decorate your place with things you can easily make yourself.

Raise Your Income

“The amount of money you earn is directly related to the amount of value you provide, and the amount of value you provide is directly related to the amount you feel you are worth”
-Ryan Schmitz-

If you’re unable to save at least half of your income because you don’t make more, there’s an obvious solution; Make more money! Now there are a ton of different ways to do this, which range from trying to negotiate a raise at work, working more hours at your current job, taking on a second job, freelancing, selling your stuff, starting a business and list goes on and on. I even wrote an article about 101 ways to make extra money. for a ton more ideas.

Every time you increase your income, continue to live the same lifestyle as you were previously. Lifestyle inflation is a huge problem that not only decreases the savings rate, but also increases the amount you need to cover in expenses each year you plan on retiring. That add more working years to your life each time you increase your monthly budget needs.

When finding ways to make money I always recommend pursuing things that are in line with your morals and also things that excite you. If you hate cutting lawns, don’t try to make money that way, there are plenty of other opportunities.

The Least Risky Way to Make Money

I probably sound like a broken record here, but the least risky way to make money is by creating your own website about a hobby, interest or passion you have, writing about it, and selling related products. Where else can you start a business for less than $100 with little to no risk and have the ability to possibly gain a full time living? Nowhere, that’s where.

Learn more about how to set up a blog and start making money online. This isn’t a scam, and I’ll show you exactly how I do it. It takes a lot of work, but as I mentioned the benefits are amazing and there’s very low risk.

Make Saving Half Your Income Easy Through Automation

If you have a job with direct deposit and a consistent paycheck you can easily set up systems where half your paycheck is diverted to other accounts where you don’t even think of the money. The idea is to only see the money you can spend in your account, and force yourself to only live off the half of your income you’re not saving. Out of sight, out of mind.

If you haven’t already set up a bank account with direct deposit I would recommend doing so. Heck, you’ll even make money in many cases opening up an account! In my area there are banks that will give you up to $150, just to sign up for a basic checking account.

By removing the temptation to spend money through automation and by paying yourself first, you’re forced to get creative spending the rest of your money efficiently.

What do I do With the Money I’m Saving?

So now that you’re saving a large chunk of your income, the question becomes, what do I do with it? As a single guy, here are the things I suggest you focus on in order:

These Are The Steps I Would Recommend Taking:
Step 1 – Save at least three months expenses in cash for your “oh shit” fund. If your expenses are $1,500, save at least $4,500. You can check out my monthly budget for an idea of common expenses while creating your own budget.
Step 2 – Begin attacking your debts by paying them off as quickly as possible. Learn more about what debts to pay off first.
Step 3 – Begin Investing for your future. Learn more about where and how I recommend investing when you’re starting.
Step 4 – Purchase a house – This only applies if you plan on living in a place at least 5 years and have a sizable down payment. Learn more about purchasing a your first house.
Step 5 – Continue to pursue additional income streams. Start low risk businesses, find further real estate deals, etc…


I think they key is developing a plan that works for you since you have to stick with it long term for this to work. Saying a 50% savings rate is the key to retiring early may not work for everyone if the other 50% of the pie leads to a miserable life. It’s all about getting to a point where the life you live now is enjoyable and the life you want to continue living when you retire.

Dividend Diplomats

I freaking love this article. You know what it shows me? You’ don’t have to be a rocket scientist, make a ton of money, to save a large percentage of your income. Everything you mentioned here is simple and can be accomplished by any person in any life situation. It just takes some hard work, determination, and sticking to your guns when the going gets tough.

Thanks for the great motivation today!