For the last seven years, my wife and I went from basically no assets to a roughly $1 million net worth. And we did it entirely through saving money and investing—not selling a business or inheriting money.
During that time, we’ve saved 45%-70% of our relatively modest incomes. My wife was a school counselor earning a teacher’s salary, and I’m still growing my business and reinvesting most of the profits.
How do we do it? And how do other people find their own ways of saving half their income? Here are some strategies.
Automate Your Savings as Your First “Expense”
After every paycheck, the first “expense” to come out of it should be your savings.
Many payroll providers let you split your direct deposit into both your checking and savings accounts. Or you can just set up automated recurring transfers from checking to savings or your brokerage account.
Nowadays, robo-advisors can even pull money from your checking account on the cadence you set. I use Schwab’s, and it pulls money every week and auto-invests it for me.
I also practice dollar-cost averaging with my real estate investments, not just my stocks. Every month, my co-investing club meets to vet a new passive real estate investment. Each member can invest $5,000 or more if they like, and I invest every month from my savings.
Score Free Housing
There are many ways to score free housing. Yes, you can house hack with a multifamily. But that’s far from the only way to do it. Here are some other ways:
- My friend used to rent out her spare bedroom suite on Airbnb. She didn’t even own—she lived in a rented apartment. She found that if she rented it for two long weekends each month, it covered nearly all her monthly rent.
- My business partner used to host a foreign exchange student. The stipend covered most of her monthly mortgage payment.
- When I bought my first home, I rented out a bedroom. It covered three-quarters of my mortgage payment, and I made a lifelong friend.
- When my wife and I lived overseas, her job provided us with free furnished housing.
Get creative and research the many ways to score free housing beyond house hacking.
Ditch a Car
When my wife and I first moved abroad, we unthinkingly went to rent two cars. Then we asked a question that would change our lives: Do we really each need our own car?
We decided to try sharing one car for a month as an experiment. Sure enough, it worked completely fine, especially with one of us working remotely.
A few years later, we moved to South America, and the free housing was within walking distance of my wife’s school. We asked ourselves a new question: Do we need a car at all?
It turns out that we didn’t. For six years, we lived car-free, walking, biking, and scootering and occasionally Ubering.
When we moved back to the States, we bought a used car, which we currently share. Given that it costs nearly $12,000 a year to own a car, avoiding one creates huge savings.
If you must buy a car, buy a boring, reliable used car that you can drive for decades. It’s not a fashion statement—it’s your transportation expense. And the lower it is, the more you can save to build wealth fast.
Make Nearly All Your Own Food
DoorDash and Uber Eats have made it too convenient to order delivery. If you want to both save money and eat healthier, learn how to cook. My wife and I make enough for dinner that we each have leftovers for lunch the next day.
Sure, we occasionally enjoy a dinner out, but we don’t indulge our lazy instincts to just pay someone else to make our food for us.
Cultivate Free Hobbies
Cooking is the ultimate practical hobby, saving you money even as you eat better. But it’s far from the only one.
I love hiking. It’s free, it’s exercise, you get fresh air, and you can do it with friends and family.
I also love reading: also free due to this newfangled service called a library.
Even my business, the co-investing club, serves two roles in my life. Yes, it generates income for me, but it also lets me invest small amounts in the kinds of real estate investments that normally require $50,000 to $100,000 at a minimum. That’s the whole reason I started it in the first place—I wanted to spread my own personal money across more real estate investments.
As a final example, it’s been a lifelong dream to write novels. Last year, I finally got serious about it and am currently about halfway through my first one. As a hobby, it’s not only free, but it also has the potential to generate income (assuming it doesn’t suck).
I know other people who do woodworking as a hobby business, or plan travel for other people, or pet sit. Hobbies can make you money rather than costing you money, if you get intentional about them.
Avoid Consumer Debt
As I wrote recently, savings begets more savings. By spending less money, you avoid high-interest consumer debt like credit card balances or buy now, pay later (BNPL).
And if you have some existing debt, a high savings rate helps you knock it out much faster, again saving you money on interest.
Travel Hack
My friend who used to rent out her apartment on Airbnb? She wasn’t there half the time anyway—because she was off traveling the world for free.
She enjoys free business class flights all over the world, using points and miles. You can learn how to do it too.
You can also save money by traveling with friends and sharing accommodations on VRBO or Airbnb. If you both have kids, that also makes it easier to take turns wrangling the children.
Pool Resources
Despite having a 5-year-old, my wife and I don’t have a babysitter on speed dial. Family and friends watch our daughter for up to a week at a time, and we look out for them and their kids when possible as well.
You can share pet care as well, or carpool, or pass books around. Break out of the mindset of paying for everything yourself, and start building the kinds of deep relationships that let you share responsibilities.
For that matter, this is exactly what we do as an investment club each month. By combining our knowledge and money, we can invest both smarter and with smaller amounts.
Borrow Instead of Buy
When I want to read a book, the first place I go is the Libby app on my phone to check the local library. I borrow e-books for my Kindle and audiobooks to listen to while working out.
There are also public tool libraries, where people can borrow tools. Sometimes they require a small membership fee, but that costs a lot less than buying tools yourself.
You can join a gym instead of buying all your own weights and equipment. Or better yet, take free workout classes on YouTube.
Borrow clothes or jewelry if you need something you don’t own (and clearly don’t need very often). And so it goes.
Move Overseas
When we lived overseas, we saved 60%-70% of our income. Since moving back to the States, it’s closer to 45%-50%.
Overseas, the savings all stack on top of one another. We didn’t need a car, living in a walkable city with cheap Ubers. High-end health insurance was affordable. We didn’t pay full U.S. income taxes due to the foreign earned income exclusion. We got free housing from my wife’s employer.
And of course, the cost of living is much cheaper in regions like South America, Eastern and Central Europe, and most of Asia and Africa.
I also became a better real estate investor by living overseas. Who’d have thought?
At a 10% savings rate, yes, it will take you 40 years to reach financial independence. At a 50%-70% savings rate, you can do it in under 10 years.
Go ahead and keep living paycheck to paycheck if you enjoy the stress of it—or start supercharging your savings rate and wealth to escape the rat race fast.
