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How to save a lot of money, people who save most of their income

By on March 11, 2022 0
  • Some financial experts say you should stop buying lattes if you want to get rich.
  • Not everyone agrees with this advice, including “super savers” who save 50% or more of their income.
  • Instead, they recommend focusing on three main expenses: housing, transportation, and food.

Chances are you’ve heard some version of this financial advice: Stop buying lattes if you want to get rich.

The idea is that if you stop spending money on small things, like your morning coffee, and invest those savings, you’ll build a significant nest egg over time.

However, not everyone accepts advice, including “super savers” who set aside 50% or more of their income.

“We are conditioned to cut the smallest expenses, like


netflix

or coffee,” said Ali and Josh Lupo, who manage to save all of their take home pay from their daily work through a combination of smart savings habits and side activities that earn enough to cover their expenses. daily.

They prefer to focus on controlling three main expenses – housing, transport and food. According to the 2020 Consumer Expenditure Survey according to the United States Bureau of Labor Statistics, these are the three categories in which Americans spend the most: housing is the largest expense, representing 34.9% of the average budget, transportation represents 16% of average expenses and food accounts for 11.9%.

The couple FI Ali and Josh

Ali and Josh Lupo, founders of The FI Couple.

Courtesy of Ali and Josh Lupo


“If you learn to get those big expenses under control, it’ll free up a ton of money so you don’t have to worry about the little things,” Josh said. It’s a strategy they first heard about in the book.”Ready for lifeby Scott Trench.

The Lupos, who focus on saving the majority of their income in their 30s so they can quit their day jobs and retire before they turn 40, have managed to completely eliminate their housing costs by “hacking their House “. It’s a strategy that involves renting out part of your home and using the income to cover some (or all) of your housing costs.

Thanks to their house being hacked, they went from renting $1,300 to living for free. They own two duplexes in upstate New York, live in the upstairs unit of one, and rent the other three units, which more than covers their monthly mortgage payment.

Avery Heilbron, 27, who says he saves 80% of his income and is financially free, follows a similar savings philosophy.

He thinks finding ways to cut big expenses is much more effective than obsessing over how much you spend on the little things. “Anything about making your coffee at home will make you rich is irrelevant,” he told Insider.

Think of it this way, he added: “If you live in a $2,000 a month apartment and you stop going to the movies with your friends once a month because you want to save $20 , it won’t do anything.”

What will help is moving to a smaller, cheaper apartment or living with roommates, which he and his girlfriend did for a while when they lived in Boston.

Reducing major expenses might require upfront sacrifices, he noted. “Maybe you get rid of your car. Maybe you stop eating out so much and learn to cook.” But the sacrifice doesn’t have to be permanent and will pay off in the long run, which he learned firsthand. “I wouldn’t want to do it again,” Heilbron said of living with a roommate. “But it made me a lot of money, which allowed us to move into a one-bedroom apartment, and now we have a bigger space.”

Heilbron owns three properties, two multi-family homes in Boston that are fully rented and one in Durham, North Carolina, where he and his girlfriend currently live. Home hacking allowed him to live for free in Boston and save to buy a single-family home in Durham, where the cost of living is cheaper, Heilbron noted.

If you commit to giving up a little space or comfort by living with roommates, moving home, or selling your car and using public transport, for example, remember that “it doesn’t have to be the eternal situation,” Heilbron said. “Just a little sacrifice early on will help.”