My Experience Saving $4k A Month

The title of this article may sound insane, but this idea has been gaining popularity in parts of the middle-class especially with the impact of COVID-19 and the concern of not having enough money saved later in life. When I cleared all of my debt in 2020, I decided to increase my savings rate to about $4k a month when factoring my income alone. I utilize various accounts on an automatic setting in order to do this each month. These accounts include a High-Yield Savings Account (HYSA), employer 401k, Roth IRA, and Individual/Joint Investing accounts to automatically save money. Continue reading to see how my experience has been so far with this extreme savings strategy.

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Super Savings Wins

Clearly, there are many benefits to saving a large amount of money per month. It is a blessing to be able to do that in the first place. Some wins that I have been able to experience include maxing out my retirement accounts early in the year, paying cash for large/expensive purchases, saving for an investment property, donating to causes I believe in, and not stressing when emergencies happen. It gives me peace of mind when I am able to save more money and ensure my household is secure.

There are a couple of things I did to increase my savings rate per month. These are also some actions you can take to increase your savings rate until you hit your desired savings percentage goal. They include the following:

  • Earning raises/promotions at a 9-5
  • Reinvest dividends from investments
  • Earn money from freelance work or side gigs
  • Eliminate consumer debt
  • Track savings and spending using Personal Capital
  • Set monthly money goals
  • Have a mindset of abundance
  • Avoid lifestyle creep

I wanted to spend a little more time on the last two points since those can be a little unclear for some people. Having a mindset of abundance is crucial to surpassing your financial goals. A mindset of abundance means that you have realized that there is plenty out there for everyone and success is achievable no matter your background. The opposite of this paradigm is the scarcity mindset. A scarcity mindset means that you feel that there are limited amounts of resources, like money, and you have a huge fear of the unknown. I’ll write more on this at a later date since there are many ways to achieve a mindset of abundance. In general, you should maintain positive thoughts about money and your earning potential.

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Lifestyle creep usually affects everyone at some point, especially when your income significantly increases over the years. Lifestyle creep is when your expenses increase as your discretionary income increases to the point where you are unable to save more money. It is important to keep your spending habits the same as you work to increase your income each year. Do not fall down the trap of lifestyle creep in order to keep up with everyone on Instagram. It is okay to buy nice clothes, go out to dinner, and do other fun things. However, you should continue to make a budget each month no matter how much money you make. You work hard for your money so act like it! Stop giving your money to other people as soon as you get it.

Annoyances of Super Saving

Saving a ton of money each month is satisfying and puts you in control of your financial future. However, saving large amounts of money per month can create a few challenges in your personal life. These are by no means any major challenges, but more so like minor inconveniences. Some challenges I experience include the following:

  • Reductions in travel
  • Not having the latest technology or clothing that is in style
  • Doing my own hair and nails
  • Weekly budget check ups

I still have date nights with my husband, continue to travel a little, and actually enjoy doing my own hair sometimes. After taking a step back and evaluating my life, I realized that some things that I was doing previously was not needed for me to be happy. Look at your current expenses and see what are some things you can cut out that you do not really need. This will help you save more money per month to invest or grow your emergency fund (which should be at least 3 months of expenses saved).

Will I Continue This Method?

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I am a simple person and do not require a ton of material things to be happy. I typically live a modest lifestyle and look forward to ice cream dates on the weekends. However, I do enjoy experiences (like theme parks, concerts, comedy shows) which I continue to allocate money towards. With that in mind, I plan to keep my current savings strategy and then increase it each year based on raises in income. It is important to note that I have minimal obligations to consider which is why I can save a decent amount of money per month. I do not have any children nor debt. I am also married, so it helps to have a supportive partner who is on the same page as you with finances.

Many personal finance gurus preach to save, save, save and then invest your money into the stock market. They are correct, but be sure to remain realistic when creating a budget and savings strategy that supports your current lifestyle and change it when life events happen. Saving too much money may keep you from doing activities that you enjoy right now, and not saving enough will negatively impact your future. You can use various savings calculators online to see how much you should be saving each month based on your income. You can also adjust the amount suggested based on non-negotiables you have right now. Set a goal and stick to it!