Michael on August 1st, 2008
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It’s Friday, so it’s time for this week’s reader-submitted Q & A. If you’d like to submit a question, click here for more information or simply email a question.

How can I possibly save on one income?

–Sue W., Clinton, NJ

STRAIGHTFORWARD ANSWER
You save on one income the same way you save on two incomes: spend less than you make.

More detailed explanation:

Saving is Simple

While not necessarily easy to accept, saving truly is simple. There aren’t any tricks. There aren’t any gimmicks.  If you spend more than you make you will always struggle. Period.  If you spend less than you make, you are — by definition — saving.  Many people think that the answer to their financial prayers is to make more money, be it via a second job, a spouse who begins to work for pay, or a big fat raise.

You: The lottery?

Also not a financial strategy.

The truth is that even the non-lottery income boosters typically don’t get it done; we find that we’re not saving much more after our income has increased.

You: Why?

Because just as soon as we make enough money to live comfortably, we want to live extravagantly.  Many people I meet today make a lot more money than they did ten years ago, yet continue to struggle financially.  In order to get control of your finances, you must look at your spending habits.

All or None? Don’t Go There

Some people who feel they can’t afford to save as much as they should (whatever that means), wind up saving nothing at all. Don’t fall into that trap.  You’re familiar with the bathwater, right?

You: Yes.  Dirty.

Absolutely, but you know not to throw out the baby with it.  Everybody can find five bucks to save today.  Five dollars.  It’s a start. Once you’ve found your five, keep at it. Do it for a few days or weeks. Then look for ten. After all, it’s only another five.  Soon enough, you’re on your way.

We all know the (spending) tortoise wins the race.  So stop chasing the (income) hare.

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3 Comments to “Friday Q & A: Saving on one income”

  1. Bethesda says:

    Great post!! With one income it is even More imperative to save – there isn’t another person you can fall onto. I keep thinking, 5, 10, 15 years ago I was making way less and still felt like I was living ok. With one income I have managed to buy a house, begin an emergency fund, and pay off nearly all my credit card debt (those crazy 20’s killed me!). It is possible to save and look at it this way – when you make the budget, it’s only you that you have to satisfy!

  2. M. Contreras says:

    do you suggest different savings accounts for different types of savings? If so, how many is too many?

  3. Michael says:

    @Bethesda – thanks! Always good to hear about and from those who have lived and thrived without starving themselves or necessarily making a ton of money. It’s just prioritization, as you’ve demonstrated.

    @M. Contreras: Having different savings accounts for different types of savings goals isn’t a bad idea, as long as it actually helps you to reach your different goals. Some people may find keeping track of many different accounts (especially if at different financial institutions) cumbersome. Others may not mind the increased administrative burden and instead find that the very existence of the different accounts (especially when nicknamed at the bank or in their personal financial software as, for example, “house” or “vacation”) a motivator to save in itself.

    How many is too many, therefore, is a matter of personal comfort. I’d certainly keep it simple by not opening accounts at dozens of banks. It may make you feel rich to get all those statements, but $1 at 12 banks is still just 12 bucks.

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