I chose not to inflate my life and instead I used the difference in pay to get out of debt. When I finally broke even and was looking at a positive net worth, I slashed all sorts of expenses to become more efficient. I should have done that months, even a year earlier.

Anyway, I live like I make 1/2 of what I make. At that level I luckily live above the poverty line and I’m able to save tens of thousands per year. Not everyone can save like that but almost every can save, it all comes down to sacrifice.

Money cant guarantee happiness
but large debt can guarantee unhappiness.

In a 401(K) or equivalent type plan, you save a set percentage of your eligible income. (Eligible may be salary only, all income, or something else depending on your employer’s plan rules.) As your income increases, these also automatically increase your savings $ at the fixed % rate. Should your income decrease, your savings $ go down at the fixed %.

In the periodic automatic transaction plan you can set up with any competent bank, you set a fixed $ amount to automatically save. As your income increases your savings $ stay flat and your savings % goes down. Should your income decrease, your savings $ stay flat and your savings % goes up.

Since, over time, most peoples income goes up, anyone using a fixed $ amount should probably also establish a periodic review of the fixed $ amount to increase it.

@Kevin: I’m a big proponent of giving yourself a raise! That is why I love frugality!

@Angela: Sounds like you are on the right path… keep it up! Don’t you just love the ING savings account system? I know I do. It is a huge help to the automation of my savings.

I took our tax refund and allocated it to an ING saving account…broke the account down into sub accounts and put the money in and have left it there to pay for the bills which are 1 or 2 times a year (taxes, insurance). I also opened an account for me…all B day and Christmas money I had put away in an envelope went into the account I also opened an emergancy savings account.

I have just began putting money into the emergancy savings account this month (husband has been laid off since Jan.). This is a start for us and having articles like this for me to read and get motivated by but most importantly pass along to my husband, has been great!

One other comment…if you are having a hard time saving…try this…set a pay period aside. The money you have left over for daily spending…shop in your cupboards for food, don’t go out as much, clip coupons, have people over instead of going out and do not buy anything in that period you truely do not need to live. Live on the slim for a small period. Take whatever you did not spend and start your emergancy account. The next pay check you can spend a little…but start watching what you buy. Buy on sale, use coupons, use coupons for gas, restraunts, food. If you don’t have one, google the place you are going to or buying something at…plan ahead. Take whatever money is left and 1/2 it…keep half for ‘fun’ and put the other 1/2 in the emergancy account. The thrid pay period…live on the skinny again…put the money into your emergancy account again. Keep repeating the process. Baby steps. Everyone needs to start someplace.

A comment on your point “Frugal living will help you to reduce expenses, and reducing expenses is arguably better than getting a raise”. Very true!

A cost not incurred is 100% cash in your pocket (or your bank), but a raise is reduced by income taxes.

I wanted to add my tip for reaching my savings goals. For a long time, I kept saying “I’ll start an emergency fund as soon as I do X or pay off Y”. Needless to say, I never reached X or Y.

Even though I felt like I didn’t have the money to start saving, I decided to start small and save $25 from each paycheck.

Every paycheck after that, I increased the total amount by 10%.

This has allowed me to increase my savings in a way that is sustainable (and also painless), as it only requires a gradual change from paycheck to paycheck.

I’m currently saving around $110 per paycheck, which may not sound like much, but I’m proud of my progress so far. Only a few months ago I wasn’t saving anything, and I didn’t see how I had the cash flow to start. Now I’m constantly increasing the amount, and have yet to miss a single savings “payment”.