When you are on the path to FIRE (if you do not know what FIRE is, here is a link) or on the path to financial independence, having a higher than normal savings rate can help kick start it.
- Zero-dollar based savings – This one is my all-time favorite. It is the easiest to keep track. It is based off the zero-dollar budget which I find too constrictive. The savings is less so constrictive. Essentially, on a weekly, or monthly transfer from checking to savings the ‘loose change.’ For instance, if your checking balance is $227.43, transfer either $7.43 or $27.43.
- Increase your income. This goes without saying but either through a raise, or a side-hustle income and then not suffering from life-style inflation.
- Budget. Cut out all of your ‘unnecessary’ spending habits. A few years ago it was about the cable bills, and moving on to streaming services since (at the time) they were the cheaper option. However, now as that the amount of streaming service options it is easy to pay for multiple. Completely negating the entire point of ditching cable. So, if it comes to that, you will have to pick one.
- Pay off your debt. Particularly your bad debt, this is the ones where the interest rate is high. There is not really any good debt, but I tend to put those with little to no interest in the good debt column as they do not accrue as much interest.
- Marie Kondo your way into savings. If you do not know what I am talking about, it is getting rid of items that do not ‘bring joy.’ Things that you do not need anymore and is just taking up space. You can begin to sell these items on Ebay, Poshmark, Mercari, to name a few.