DiscoverMarriage, Kids and MoneyHow Living on 50% of Our Income Helped Us Reach Financial Freedom - with Kelly Smith
How Living on 50% of Our Income Helped Us Reach Financial Freedom - with Kelly Smith

How Living on 50% of Our Income Helped Us Reach Financial Freedom - with Kelly Smith

Update: 2020-02-26
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There may not be a single right way to achieve financial freedom, but supersizing your savings is certainly a powerful strategy.

But what does supersizing your savings mean? More importantly, how does someone go about doing that?

I sat down with Kelly Smith from Freedom in a Budget to learn more about how she and her husband are crushing their goals and enjoying their lives while living on 50% of their income. 

In our chat, Kelly proves that budgets aren’t constricting. They’re a pathway to freedom. She shares details on making the decision to take the 50/50 path, milestones they’ve already crossed, and where they are headed. Plus, she offers actionable steps for people who want to make more money and want to make saving 50% of your income a reality. 

How They Decided to Live on 50%

Although she adopted a frugal lifestyle prior to getting married, Kelly wasn’t always a super saver. In fact, she says that there was a time in her life when her car was repossessed and her electricity was turned off. She recalls living off spaghetti and butter—not just because she loves pasta—because it was a cheap meal her bank account could actually afford. Before she got on the 50/50 path to savings, any time she saw money in her bank account, she was tempted to spend it. If her balance was $20, she interpreted that as having $20 to spend. She didn’t think much about saving. 

Once she realized the value in savings, she began to reevaluate how much she was spending and how little she was saving. She says that she quickly pushed the pedal to metal in order to get more aggressive with her finances. After her “enough is enough” moment, she started budgeting and closely tracking all of her purchases. Once she started putting the time into monitoring her money, she realized that she actually had more leftover than she thought. Tracking her spending reduced her impulse purchases, allowing her to have $200 leftover at the end of one month. Motivated by that progress, she says things started to snowball. 

Prior to getting married, she and her fiancé decided that living on 50% of their income was an important goal. It required some back and forth and open communication. Kelly quickly realized that even though she was interested in living as a frugal spreadsheet fanatic, her husband had other interests. She says that he does eat out more than her, but that works for them. The most important thing is that they dream and plan together. She says that one of the most helpful reminders they give each other is: “If we do this, then we can also do that.” That helps them stay focused on all the opportunities the 50/50 path affords them.

The Financial Milestones They’ve Achieved Living on 50%

Saving 50% of your income can push you closer to your financial milestones faster than you’d imagine. Though Kelly and her husband have only been living on 50% for a handful of years, they are checking boxes on their goals. Here are some of the milestones they’ve already crossed.

Affording The Wedding of Their Dreams

As a South Florida resident, Kelly points out that the cost of living in her area is high. In fact, she mentions that it isn’t all that unusual to see some people spend close to six figures on celebrations like weddings and even bar mitzvahs. When she and her fiance started talking about their own wedding, Kelly knew that she was not interested in spending six figures. She didn’t want to spend anything close. Ultimately, she and her fiance worked with a wedding coordinator to design a wedding they loved for around $30,000. Their ability to live on 50% of their income allowed them to pay cash for their dream wedding.

Buying Her Dream Car in Cash

Kelly also purchased the car of her dreams. Though people often mistake it for brand new, she drives a 2016 Jeep Cherokee. This purchase is something she and her husband started saving for right after the wedding. It took them a little over a year, and then she was able to buy a car she loves in cash. She emphasizes two things: combining finances let them hit their goals faster, and her new-to-her car is a true luxury vehicle compared to what she used to drive.

Saving for a House Downpayment 

After crossing two big milestones on their 50/50 path, Kelly and her husband had another goal to conquer: buying a house. To do this, Kelly and her husband started to make small cutbacks in different parts of their budget. She says her goal was to see where they could save even more money. By earning more money and reducing their expenses, they were able to buy sooner than they thought. The fact that closing costs were less than she originally thought helped, too. Thanks to the work they put in as a couple, they were able to afford a down payment on a home mortgage of over $370,000. 

Planning Your Finances on the 50/50 Path

It’s clear that the 50/50 path leads to financial freedom. How exactly do you go about saving 50% of your income? You have to plan for it. That kind of aggressive savings doesn’t happen on accident. Kelly is a self-proclaimed numbers and Excel nerd. That means that she deals with a lot of the household numbers and data. 

However, their planning truly is a team effort. She and her husband make time each month to go over their financial wins and failures of the previous month. Together, they also review their progress toward monthly and yearly goals. This helps them understand how much of their income is going towards savings and how much their net worth is growing.

Setting Goals for the Future

Because Kelly and her husband are still living on 50% of their income, they know they can continue to set ambitious goals. After taking an Alaskan cruise this year, Kelly says travel will continue to be a big goal for them. She also says that they hope to close on their first rental property by the end of the year. Specifically, they are looking at saving up in order to put 20% down on a 30-year fixed mortgage. It’s no small feat in a high cost of living area, but she thinks they are up for the challenge. 

How others can go from 0% to 50%

It’s hard, maybe even impossible, to hear Kelly’s story and not want to start saving 50% of your income. But if you’re not saving anything, is it even possible? Of course it is. After all, that’s exactly where Kelly started. 

Kelly’s advice is to simply start by creating a written budget and committing to tracking your spending. To avoid this becoming a daunting and time-consuming task, Kelly suggests spending a few minutes every few days looking at your numbers rather than waiting until the end of the month. In addition to saving you time, you can also make corrections as you go. If you notice that your grocery spending is nearing the top of your budget in the middle of the month, shop your own pantry for meal ideas for the next week. Once you start to end the month with money leftover, make sure to send it to savings or invest it. 

How to Make More Money

In addition to cutting costs, Kelly and her husband worked hard to make more money. Since she started her YouTube channel four years ago, Kelly says their income has grown over $100,000. Both she and her husband have earned raises. He also changed jobs. Plus, they both side hustle. 

Kelly says there are so many side hustles available to people. While they may not always be fun, the extra income does add up quickly. Even if you feel that side hustling isn’t right for you, Kelly challenges everyone to reconsider that. In particular, she says working overtime is a great side hustle. When she found her overtime hours getting cut, she asked to help out in a different department. That meant extra training and working overtime in a role that wasn’t her real passion. Still, she knew it wasn’t a career change—it was only a side hustle. 

Of course, the key part of making more money is also to save it. Kelly says that she and her husband will celebrate with dinner at a nice restaurant. However, they also work to keep lifestyle inflation in check. One way that Kelly recommends people do this is to increase their retirement accounts when they land windfalls, like raises or bonuses. 

Final Thoughts on Living on 50% of Your Income

No matter where you are on your personal finance journey, you can learn to start saving 50% of your income. Check out Kelly’s Freedom in a Budget YouTube channel archives to see her own progress through debt on a low income if you are at the start of your debt pay down journey. Her more recent videos are great reminders of the power of building income, investing, and living on 50% of your income. If financial freedom is a destination you want to reach, explore how the 50/50 path can help you get there. 

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How Living on 50% of Our Income Helped Us Reach Financial Freedom - with Kelly Smith

How Living on 50% of Our Income Helped Us Reach Financial Freedom - with Kelly Smith

Andy Hill