When it comes to most things, we simply cannot rely on our own personal motivation to achieve things. Motivation is too flimsy. It comes and goes with the wind and is often not there when we need it most.

So if you are anything like me, we have to rely on other things to get us to move closer towards our goals, whether that be financial, health, spiritual or any other area of your life you are looking to improve.

Here are the tools and strategies we use to help us save a significant portion of our income per year.

No 1. Automate:

We try to automate as much as we can so that we don’t even have to think about it. If I rely on myself to remember to transfer money from one account to another, it often just won’t happen (hello mom brain). Instead, we rely on the power of automating as much as possible, so we can set it and forget it.

My employer allows me to automatically split my paycheck into three different accounts. So the money goes where I want it to without me having to remember.

Here is what that looks like:

So as you can see, I try to pay myself first by having a good chunk taken out before I see my paycheck with contributions to my 401(k). To note, I only contribute 12% of that amount to my 401(k) and my employer contributes an additional 7.5% for a total of 19.5%.

Once the 401(k) is maxxed out, we set up automatic deductions that goes to fill our taxable brokerage and HSA accounts.

Additional Income

I typically receive a 10% bonus each year. I plan to save/invest 85% of it with the other 15% going towards fun stuff (i.e., we are going to Ireland this year to see family (finally) and the rest will likely go towards gifts for the holidays).

No. 2 Find Ways to Increase Income

It was a game changer to take on a second part-time gig that was a contract marketing role. It brings in an extra few thousand dollars a month. Since we technically didn’t need that money to live, as we were already living off our income, we just decided to pretend that money didn’t really exist.

It allowed us to invest an extra $20,000 or so each year and it takes up about 5 hours a week for me. There were also a few unexpected expenses that came up this year that this side gig covered, which was nice not to have to dip into savings.

$20,000 per year over the next 5 years invested with a 10% return is $136,000.

If I then just let that sit in the market in my boring old index funds for the next 30 years, that money will grow into $2,698,767!

All for taking on a low-stress, easy-enough side gig for a few years of my life.

To me, it’s worth it.

In the gig-economy we live in, there are million ways to make some extra money. Actually, there is an awesome post about ways to increase your income if you need some inspiration!

No. 3 Work to Reduce 3 Largest Expenses

I am not someone that is into cutting out all of the little things to save a few dollars. I’ll happily grab a coffee out if I want one, or meet a friend for lunch. I’m also not one to decline travel, so we take trips throughout the year.

I think when people think about saving, they think they have to give up all of life’s simple pleasures. I’m not into that approach at all because it feels like deprivation.

But I am into working on reducing our biggest expenses, which for us (and most people) are (1) housing, (2) transportation and (3) childcare.

All three of which could easily take up our entire paychecks if we let it.

Housing.

When we bought our first place, we decided to spend way below (55% less) what we were approved for. It can be SO tempting to get the amazing house that you’ve always wanted, but had we done that, we would be crippled and unable to save as much as we can.

Our mortgage payment is actually cheaper than what we were paying for a 2-bed rental down the street. Of course, with owning a home comes other expenses, but we plan to hold onto this for a while and it works for us right now.

Transportation.

Car payments are the silent killer in my opinion. Without even realizing it, two car payments on new-ish cars could easily eat up a huge chunk of your income.

According to Experian data, the average monthly car payment was $568 for a new vehicle and $397 for used vehicles during the second quarter of 2020.

Yikes!

So that means if you had 2 new vehicles, plus the cost of insurance, gas and maintenance, you could easily be spending upwards of $1,700-$2,000 per month on your cars alone.

Just to put that into perspective, let’s walk through a scenario where you got rid of one of your cars.

“I know, I know, it seems impossible.”

“But is it?”

If you live in a big city, most likely you have options for public transportation that are far more cost-effective.

So let’s say you make the decision to be a one car family.

You now have roughly $850 per month to invest instead. If you stick that into a low cost index fund over the next 10 years, (10% ROI), you would have $175,000 at the end of it.

“Pretty cool huh?”

Childcare.

Childcare costs have skyrocketed over the last few decades and most families feel crippled by these costs. Unfortunately, I happen to live in Illinois, which is one of the most expensive states for childcare, outside of New York, California and Colorado.

When I first started looking at childcare options in 2019, most of the daycares in Chicago were between $1,800-$2,000+ per month (for one child). That would have crippled us with all of our other expenses so I kept searching for different options.

We were fortunate to find an in-home daycare that we absolutely love for our son, and the cost is roughly 50% less than most of the larger daycares in our city.

I can absolutely see why a lot of people end up leaving the workforce during the first 5 years of a child’s life. In a lot of scenarios, the cost can sometimes be greater than or equal to the amount a parent is making.

Some of the options that I have found to ease the financial burden is to find a smaller in-home daycare option. They might not come with all of the bells and whistles that a bigger daycare has, but we’ve loved this option.

Another option I’ve seen some parents use is a nanny-share. Where you and another person share a nanny to watch both of your kids together. The cost is slightly higher since they are watching two kids, but you are splitting the cost with another parent so it ends up making sense for a lot of people.

In Conclusion

It may not be realistic to start from saving nothing, to all of a sudden saving 50% of your income. And I realize for a lot of people who feel like they are just barely scraping by, it sounds laughable.

I get that. I really do.

We lived on one income for many years. And that income was low. And I had massive student loan debt.

During that period of time, we really had very little (usually nothing) left at the end of the month to invest.

But it’s important to start with something.

Start small. Find a way to cut $50-$100 a month and get into the habit of investing that into your retirement, health savings or an emergency fund.

The more you get into that habit, the easier it becomes.

Don’t rely on your own motivation to invest.

Set up automatic deductions from your paycheck and you won’t even notice the money being gone.

Find ways to increase your income. It’s easier to expand your income and invest than it is to just continually cut your expenses.

Simply cutting away all of the the fun things in life to save money will eventually feel like deprivation.

Find a way to instead focus on the largest expenses. These will make the biggest impact on your financial future.

You got this!

I’d love to hear from you. What are your strategies for saving and investing?