Today's post is by my friend, Cassie, who is a stay-at-home mom who made it her mission to change her family’s future. She convinced her husband to live below their means and start budgeting. Her determination and focus on finances helped her pay off their debt and save over $100,000 before they turned 30!
You can find her over at her blog Living Low Key!
I still remember the day, the day that I checked our investment accounts and saw that we broke the $100,000 mark!!
It was a huge day for me! After all, when I had first set that goal, 5 years before, it was kind of a joke.. I didn’t think I’d actually be able to save that much.
I’m not going to lie, my husband laughed at me when I told him my plan. His doubt that I would actually be able to do it was definitely the driving factor! Who’s laughing now!!
Listen, if you have similar goals, find something that gives you MOTIVATION because you’re going to need lots of it.
We didn’t inherit money, we didn’t own a business, and I didn’t win the lottery. It was a lot of determination, living frugally on a budget, and investing our money that got us to this point.
There are no secrets to saving money, the concept is simple! You make money and then you don’t spend all the money you make. Pretty simple right? Yea, no.
If that was the case everyone would be RICH!
Make Saving Money Easy With A Budget
Saving money becomes a whole lot easier when you have a budget in place and you tell your money where to go. There are no ifs, ands, or buts about it. Budgeting for us was the most critical aspect of being able to save over $100,000.
When it comes down to it, there is no system that we’ve had better results with then the cash envelope system.
Establishing A Successful Cash Budget System
Here are the steps we use to establish a successful budget.
1| Create A Budget And Stick To It– Calculate how much you make each month. Do you have multiple sources of income? If so make sure to add up every last penny. It’s okay if your monthly take home pay changes. In order to be successful with this, you need to make a new budget every month because every month you’ll have different expenses.
Remember to pay yourself first! Make sure to include in your budget the amount you want to save each pay period, and put it away before you start spending.
2| Calculate Your Expenses For The Month- Do you currently know what your expenses are each month? If you don’t have them written down, you should. If your bills are on auto draft like ours, it’s very easy to keep track of your expenses. Head online to your bank account and write down your monthly expenses.
3| Divide Your Spending Into Categories– Next divide your money into categories such as groceries, necessities, gas, entertainment, kids, and any other categories you use. I keep all of our monthly bills on auto draft and then use cash to pay for everything else.
4| Fill Your Envelopes- Head to the bank and get your cash. I pull out my budgeted amount of money for two weeks. Once I get home I split the money in half so I’m filling my envelopes with a week’s worth of money. This way I won’t be walking around with too much cash in my envelopes.
5| Spending Your Money- When you spend you have to be very money conscious. Once you are out of money you’re out until your next “payday.” I use the back of my envelopes to keep track how much I spend at each store. It’s a really simple way to let myself know if I’m getting low on money.
6| Save Any Extra Money That Is Left Over- When each pay period is over if you are lucky and frugal, you’ll have left-over money. You can choose to save it or use it to reward yourself for staying within budget. Remember you have to make saving money fun or you won’t want to stick with it long term.
If you need more help getting your budget set up, we’ve got a great step-by-step process you can check out here.
Embrace A Frugal Lifestyle And Save Money
Do you currently live below your means? If you don’t, you need to start! What most of us don’t realize is we spend A LOT MORE than we realize each month.
One way or another this habit needs to stop!
Buy the smaller house, drive the cheap used vehicle and stop buying stuff to just buy stuff.
I love having nice clothes, I mean who doesn’t. I’m a stay at home mom, so really I don’t need nice clothes nor do I wear them. I’m chasing these kids around all day so yoga pants and a comfy shirt is all I need.
I think I enjoy buying nice clothes just to buy them. For the longest time, shopping was MY THING… It’s what I did when I was bored.
It took me a long time to realize that the temporary happiness I was getting from shopping was only that, TEMPORARY.
Now I spend my time finding better ways for my family to live on less.
These are our favorite frugal living tips that we lived by to save $100,000 and continue to live by:
- Live below your means – scale back where you can
- Only use credit cards if you have the cash to pay them off right away
- If you don’t have the cash don’t buy it
- Enjoy no-spend weekends or weeks
- Don’t try to keep up with the Joneses – there probably in a lot of debt
Remember you can maintain the same quality of life as you did before, you’ll just do it living on less.
Need More Cash – Find Ways To Make Extra Money
Easier said than done, right?
If your sitting there thinking okay this isn’t going to work for me, I truly don’t make enough money to save anything after paying my bills. Heck, I don’t even make enough to pay my bills!
Well then, it’s time to increase your income and pick up a side hustle. Truth be told, most of us only need an extra hundred dollars a month to start saving money.
Do you have a hobby?
Turn it into a money making hobby. A few years ago my husband and I made our own farmhouse table for our dining room. It turned out really great so we started making and selling furniture.
Yes we turned something we had never done (build furniture) into a side hustle over night!
Here are a few side hustles you can start today:
- Child care
- Sell things on Amazon, Facebook or Craigslist
- Rent out a spare space in your home
- Start a cleaning service
- Sell unwanted items around your home
- Start a blog
Invest Your Money To Make More Money – Start TODAY
What if I told you that we didn’t actually “save money” for 5 years in order to reach $100,000
Yea, I bet you’re confused now!
As soon as we started getting serious about saving we went to our bank and talked to an advisor who recommended we try investing. Now that I look back, it seems a little crazy. We put a lot of trust in that advisor who we knew for all of 1 hour before we jumped into the investing world.
We didn’t know much about investing but we did know we wanted to have our money doing the hard work for us.
We had saved up enough money to open a mutual fund account and guess what, it has been beyond what we could have imagined.
During the first 3 years we added as much as we could to our mutual funds every month. The following 2 years we slowed our contributions because, well, life happened!
During those last two years our money continued to grow in our mutual fund accounts and we saw over $40,000 in interest build up.
Crazy right!! The coolest part is we still have these accounts open and they continue to grow at a shocking rate each year!
This is why you shouldn’t let your money sit in a savings account at your local bank. Get your money into a high interest yielding account.
Most of our mutual funds aren’t even considered high risk and the interest we have earned is now more than the amount we have contributed. Compounding interest is amazing my friends!
Here are a few different types of investments:
- 401k – If your employer offers a 401k with a match that’s like free money! You have to take advantage of that!
- Mutual Funds – We use mutual funds and we HIGHLY recommend checking them out if you are looking to save money for 5+ years. These are actively managed funds so the fees are a little higher.
- Index Funds – Index funds are similar to mutual funds. These funds are supposed to match the major stock market indexes and generally do well. Index funds are unmanaged accounts so they have really low fees.
- Stocks- Lots of people play in the stock market. It’s a little more risky so we don’t play in the markets very much. The idea is to buy low and sell high.
- Money Markets- If you are looking to save money for less than 5 years I recommend putting your money in a money market. They return a higher interest rate than traditional savings accounts.
Saving money isn’t as hard as you might think. A few simple changes to your lifestyle can set you on the course to financial freedom. Set goals, work hard to achieve them, and change the course of your future starting today!
How are you saving money and paying off debt?
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