Thanks to smart saving and investing habits, Justin and Kaisorn McCurry built a $1 million portfolio in a decade, which allowed them to retire in their 30s.
At the couple’s peak earning period, when they were making a combined $138,000, they were saving up to 70% of their income, Justin tells CNBC.
The Raleigh-based couple, who now have three kids, upped their savings through various strategies. Here are six of their best money-saving tips.
Focus on cutting the “big three expenses”
Keep the “big three expenses” — housing, transportation and food — as low as possible, says Justin: “Look at those top expenses and see if there’s any negotiating room.”
They stayed in the starter home they bought out of grad school and paid off their mortgage in 2015, meaning that, on a monthly basis, they only cover utilities and maintenance. In terms of transportation, “we kept the cars that we bought brand-new in college for 16 years and just replaced them last year,” says Justin.
And they only budget $500 a month for groceries. You can read more about how they feed a family of five for $500 a month on their blog.
Choose a partner with a similar financial philosophy
Who you marry or choose as your partner matters. For Justin and Kaisorn, “our similar outlooks on personal finances have been a huge wealth generator,” writes Justin. “We agree on saving a large part of our incomes. We take vacations off season because crowds are thinner and our wallets get fatter (er, less thin). … We live in a modest neighborhood and drive modest cars.
“We made these frugal choices so that one day we can retire early and not have the stress and time demands from a regular job burdening our daily lives.”
Take advantage of work benefits
If you’re not getting everything possible out of your employee benefits, you’re leaving money on the table.
Justin and Kaisorn maxed out their company 401(k) plans, which both offered a matching contribution, and contributed to Justin’s employee stock ownership plan. They also maxed out their health savings accounts (HSA), into which you can put pre-tax money and use towards medical costs.
Check to see if your company offers a flexible spending account (FSA), commuter benefits or a fitness reimbursement program. If you have additional questions about benefits, talk to your human resources department to understand exactly what’s available to you.
Bank your raises
Start thinking of money as something to invest rather than something to spend, says Justin. Anytime he or his wife earned a raise, the extra money went straight to their accounts.
You can apply the same strategy to a bonus, birthday check or small windfall. Instead of planning trips or grabbing gadgets, consider directing at least some of it towards lingering debt, a retirement savings account or an emergency fund.
To resist the temptation to spend any surplus money that comes your way, send it directly to savings. That way you’ll hardly even register that it’s there.
Track your spending
Do you know how much you spend eating out, on Uber or on monthly subscriptions? It’s probably more than you think, and you can’t drastically improve your savings when you don’t know how much you’re spending.
“Knowing how you spend lets you determine whether you get value for your dollars, and where you might be able to focus efforts to reduce expenses further,” says Justin.
The McCurry’s use Personal Capital to track expenses, but there are other sites out there that do similar things, like Mint or You Need a Budget. You can also write down your purchases in a notebook or keep a spreadsheet on your computer.
Spend time with your kids, not excessive money on them
Reports indicate that the cost of raising a kid is more than $230,000 — and that doesn’t include college. But according to the McCurry’s, “you don’t have to spend a ton of money on your kids.”
In fact, the couple maintained a high savings rate even after they started having kids in 2005 by taking advantage of the benefits offered by their companies, having family help out with childcare and using hand-me-downs.
“After childbirth, we didn’t spend a whole lot,” Justin says. “We bought a mattress, crib and some child seats, so it was several hundred dollars, but not thousands and thousands. Having kids was kind of a blip on the radar in terms of spending.”
He continues: “Moral of the story: Don’t spend excessive money on them. Spend time with them.”
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