Blog

The intention of this post is to communicate that you don’t have to make a lot of money to save a lot of money.

When I graduated with my bachelor’s degree I had less than $100 in the bank. Prior to getting married (I got married 10 months after graduating), I was terrible at managing money. I had big financial goals without the habits to back them up. However, when I got married my financial perspective completely changed. Instead of spending money like there’s no tomorrow I became more focused on long-term goals and saving money became much easier. Fortunately, my wife had the same financial goals that I did. Something that greatly helped was at the time I got married I had a boss who was savvy with personal finances. I’m grateful he was willing to share his knowledge with me. My goal is to share insights that I learned from him and through other experiences over the past four years.

Those who know me might say, “but you have two incomes so that makes it easy to save.” While my wife does contribute her income, she’s worked full time for less than a year. She did two internships prior to that, but for the majority of the last four years she’s been a full time student. During two of the four prior years I was also attending graduate school at night while working full time during the day. We paid cash for two master degrees (over $30k).

So how have my wife and I done it? First, a key metric to monitor and increase personal wealth is your net worth (cash/assets you own – debt you owe = your net worth). My wife and I have set goals and regularly communicate about our financial goals. Here is a glimpse of our financial priorities:

1. We save 100% of my wife’s income
   

    

   1. With the goal of saving for future purchases (I.e. house, car, etc). This helps us maintain a modest lifestyle and offers security knowing that we can live off just my income if my wife were to stop working. We don’t want to be dependent on two incomes and this habit allows us to do that.
2. We max out our HSAs every year
   

    

   1. HSAs are a priority because while they are designed to save and pay for medical expenses, once you hit a certain age (65) you can use them like an IRA. My old boss taught me that they’re actually the best retirement vehicle because they’re the only vehicle that avoids payroll taxes (~7%).
3. Max out our Roth IRAs
   

    

   1. We each have our own personal Roth IRA that we max out each year. The advantage of a Roth IRA is our investments are growing tax-free (as we’re contributing money that’s already been taxed). This is beneficial because our tax rate today is most likely lower than what our tax rate will be when we retire.
4. Contributing to our employer’s 401K plan
   

    

   1. We make sure that we contribute the required amount to earn a 100% match from our employer.

One thing that’s nice about contributing to the HSAs and employer retirement accounts is they’re automated each paycheck so no action is required on our part. We reassess these each year to make sure the amounts are still aligned with our goals.

While we have saved a lot the past four years we have also made a concerted effort to make sure we’re doing fun things while we’re young. One of our favorite things to do is travel. While we’ve been focused on saving we’ve also been fortunate to travel to the following places in the last four years:

• Germany
• Hawaii
• Mexico
• Pittsburgh
• Texas
• Ohio
• Washington
• California
• Kansas

The habits we’ve developed have been the most beneficial in helping us balance having fun today while also saving for the future. My wife does a great job at finding ways to maximize opportunities. For example, on a recent flight she was the first person to volunteer to be “bumped” to take a flight 2 hours later, for which she earned $500. We used the money to pay for our adventurous activities in both Hawaii and Moab. The past few Thanksgivings we’ve traveled to Texas and Pittsburgh. With the week of Thanksgiving being the most expensive time of year to travel, we chose to drive to Las Vegas to catch flights instead of Salt Lake City, saving us over $2,000 between the two trips. Finding ways to do fun things for less has greatly helped us live a fun life while saving for the future.

Not at any moment over the last four years did it feel like we were saving a lot of money. However, looking back it’s amazing to see what our small efforts have turned into (over a $100K!). I’m excited to see what our small efforts will grow to be in the next four, ten, twenty, or even thirty years.

If you’re curious our wealth includes the following: retirement savings (50%), savings (emergency, home, car, fun/vacation) (30%), HSA (20%), with $0 debt. We don’t own a home but when we do I’ll include the house as an asset and the mortgage as a liability.  Because cars depreciate so quickly, we have chosen not to include our cars as a part of our wealth metric.