### It’s Simple, but It’s Really Not Simple. Figuring Out How to Save

Is it really that simple to save? The answer is, it depends. In theory, saving is very simple. Spending less and saving whatever is left every paycheck sounds really easy. What if there isn’t anything left? When my family started out, there was nothing left. Saving was a dream when you make \$45,000 gross income and have two children. Let’s dive into what a realistic budget and possible monthly savings may look like.

First things first, establish the amount of money we have to work with. The median weekly income according to the United States Bureau of Labor Statistics in July 2022 was \$1,041 a week. (https://www.bls.gov/news.release/pdf/wkyeng.pdf) If you take that number times 52 weeks, the average annual income is \$54,132 before taxes. A monthly income would be \$4,511 and if you remove 25% for taxes (estimation), you end up with a take home pay of \$3,383.25. Let’s work through applying commonly held saving methods that are popular today and applying them to the above understanding.

Secondly, we have to identify expenses. Expenses are your bills, or expected cash outlays to cover needs. Slight variances may occur monthly but typically expenses should be pretty standard. Varying expenses month to month should be limited and investigated to see why they are being caused. Below is a guesstimated monthly budget.

Based on the budget, the savings percentage would be 6.7. If there are no emergencies or urgent demands on your savings amount you would have \$2,750 saved at the end of the year. Conservatively speaking, I would make the goal to have \$2,000 saved and cut back on fun spending. The budget does not factor in any student or auto loans, so that may also cut in here but depending on the situation other bills may be lower as well.

Everything I’ve read about saving tells me how simple it is, but laying out the numbers and rules together doesn’t seem to be as common. Starting with the 50/40/10 method, you would have the following amounts: \$1,691.63 for needs, \$1,353.30 for savings, and 338.25 for fun stuff. The amount for needs in this method is simply too low to be realistic based on the expected expenses. Let’s look at an 80/20 rule which may be better suited for the median income bracket: \$2,706.60 needs, and 676.65 for savings. We get closer in this method, but we are still short.

The question now becomes, can we actually make saving anything work? Hopefully, your answer is yes. Saving has to start somewhere. Whatever you can save, DO IT. Every quarter (3 month period) analyze your expenses and look for gaps where you can cut back. Lastly, try to add skills and side hustles that can increase your monthly income. There are only two ways to increase the amount you can save monthly, spend less or make more, which is why it’s simple but it’s really not simple.