People often ask me how I afford to travel as much as I do without falling into debt and while making a lower-middle-class income. The answer is that I live on half my paycheck. No, I’m not exaggerating. I’ve been doing this on-and-off for four years.

Every week, when Alexis Chateau PR deposits my pay, I move half of that to a savings account. That’s the money that I use for traveling, paying my car insurance in 6-month bulks and making down payments on large purchases.

I’m able to do this because my home is co-owned, I have no student loans, my car is almost paid off and my womb has cobwebs. When I buy my tiny home in the spring, my savings will be vastly depleted, but for now, it’s nice to see the numbers climb.

Would you like to be a lean, mean saving machine too? Even if you have debt and kids, there are several ways to do so. Here are my top ten tips to get you started.

1. Increase Your Income

If you’re making just enough to get by, living on half your income is just not possible. While it’s easier to save money than make more money, you should actively look for opportunities to achieve the latter. Is there overtime at work? Take a few shifts while you hunt for a better-paying job or try to qualify for a promotion. You could even start a side gig!

Note that sometimes you have to take five steps back to take ten forward. For example, in 2018, I gave up 15% of my income to focus on my business and publish my novel. By 2019, compared to the year I took the pay cut, I increased my business income by 620% and my overall income by 82%. Moral of the story? Know when it’s time to invest in you.

2. Create a Budget & Stick to It

Budgeting is an important part of money management. Without one, you’re more likely to spend a lot of money throughout the month and have no idea where it all went. If you routinely get surprised by your month-end bank balance or credit card statement, you need a budget.

When you increase your income, you might feel tempted to increase your budget spending too. Don’t. I maintained virtually the same budget I had in 2018 for 2019. The only reason my 2020 budget will be different is because of the alternative lifestyle I’m investing in. I want to pay the startup costs now, so I can live cheaply later.

3. Set Up Automated Payments

Some people are extremely disciplined and can move their savings across on their own. If you have a variable income, you may need to rely on this, as how much you can save may change each month. For everyone else, automated payments can ensure that money gets moved across before you ever get tempted to spend it.

Even though I pay myself a fixed salary from my business, I prefer to move the money across myself. I get the same personal satisfaction from doing this that someone else might get from crossing an item off their to-do list.

4. Save Your Tax Money

If you get a tax refund in the spring, your first instinct might be to treat yourself. This isn’t a bad idea, but it’s an even better idea to save it. This is an extra few hundred to a few thousand dollars that comes back into your budget. Why give it away again?

When I first came to America, I was intrigued by this idea of getting money back from the government. I received my first refund for the tax year of 2016. I saved them every year. When I bought my first car in 2018, I used it as my down payment.

5. Invest Untouchable Money

The more money you have saved, the more you might feel tempted to spend it. That can quickly spiral out of control and deplete what you worked so hard to build. If you’re saving for a specific purpose or for emergencies, then it’s best to keep it liquid. However, if you’re saving for the future, consider investing in CDs, stocks, bonds, real estate and other options.

As you may have noticed, I mostly save for specific purposes. This is money that I plan to spend at a later date anyway. It might be tomorrow or it might be two years from now, but I’m saving to spend it. For the money I don’t intend to spend any time soon, I invest. I’ve bought shares in a few startups and invested in more traditional mutual funds via Betterment.

6. Reduce Monthly Payments

I mentioned in an earlier post, that there are several ways to prioritize which debt to pay off and when. I prefer paying off debt with higher interest rates first when I have a lot of disposable income to work with. When I know a limited budget is a-coming, then my focus is on removing as many monthly payments as possible.

The average car payment for a used car in America is roughly $381. Mine is a fraction of that, so I got off on the right foot. As I mentioned earlier, I pay my car insurance in bulk. Not only does this mean I don’t have a monthly payment, but I also get a 10% discount on the total insurance cost for doing so.

7. Drive Safely

The larger and more expensive your vehicle is, the higher the insurance premium tends to be. Your driving record also plays a big role, so driving safely is one way to keep your monthly payments low. Avoid drinking and driving. Get enough sleep before getting behind the wheel. Think twice before you let an unsafe driver use your car.

Shortly after I got my license, I voluntarily attended defensive driving classes. Not only did this equip me with theoretical knowledge for real-world driving, but it also gets me discounts on my insurance. I consider myself a safe driver. I hope you are too. It will save you a lot of money down the road.

8. Start Downsizing

I give this advice a lot, so by now, I probably sound like a broken record. However, the number one reason I can live frugally is that I live in a small home outside the city. Sometimes downsizing is moving to something smaller in the city. Other times, it’s moving into something bigger outside the city. Whichever option you choose, consider the cost of not just rent or mortgage, but also maintenance.

When I move in the spring, I’m taking possession of a home that will be about 200 SF. For some people, this is much too small and the idea of living in a home this size would drive them insane. For me, it will be just right. The smaller your home, the more mobile you can be. It also costs less to maintain, costs less to insure and takes less time to clean.

9. Set Solid Goals

If you don’t have solid goals in mind, then all of this will feel tedious. You’ll try it for a few weeks or months and quickly fall off the bandwagon. Find something to save toward or look forward to. Write it down. Decide how much you need to save in total and how much you can set aside each month to reach that goal.

In 2016, the goal was renovating my home. By 2017, that switched to travel. In 2018, I decided it was time to get a car. In 2019, I decided I wanted to pay off that car as soon as possible and start saving for retirement. Now, for 2020, I’m about to embark on my tiny home journey. Find goals to become passionate about. Saving to fund them will get so much easier.

10. Treat Yourself

A life of restriction is not fun. Even for the most disciplined and determined people, it begins to take a toll. You miss your favorite items and you begin to crave your old life. This is one of the biggest reasons people relapse on their journey to become a lean, mean saving machine. Always set money aside to treat yourself.

Despite knowing that 2020 was going to be an expensive year, I still took a 14-day trip to South Asia in 2019. I also took a 7-day trip to California a month later. That was 21 days of paid vacation and I intend to take 30 this year. The way I see it: I could die tomorrow and then someone else will swoop in and take my beloved savings, so I’m using a percentage of it while I’m still alive and kicking.

While not everyone can live on half their paycheck — even I will have to give this up, come May — there are many ways to start building your nest egg. Just remember to make room in the budget for a little fun. 

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I am not a professional financial adviser. This article is based on my opinions and personal experiences.