If you're looking to save more, early retirees and financially independent individuals say the goal isn't necessarily to cut out every small pleasure. It's to be more intentional about where your money is going, and to make sure more of it stays with you.
Business Insider rounded up the top savings tips from people who have reached financial independence, retired early, or made major progress toward their big money goals.
Not every tactic is realistic for every household, but the common thread is to make saving intentional rather than accidental.
Know your numbers and avoid lifestyle creep
Regardless of your goal, keeping more of your income starts with knowing your numbers: what you earn, what you spend, and what you actually save. It's difficult to improve your savings rate if you don't know how much money is leaving your account each month.
A good place to start is by combing through credit-card statements and tracking where your dollars are going. First, make sure you're spending less than you earn. Then, calculate your savings rate. What categories are costing more than you expected? Where could you reasonably cut back?
And if you start earning more, don't automatically start spending more.
For New York City couple Alex Nathanson and Josette Chang, avoiding lifestyle creep was central to reaching financial independence. They chose not to upgrade to a larger apartment, even though they could afford to.
"Moving up would be just riding the hedonic treadmill," Nathanson said. "You get a bigger place now, and a few years later you'll want a bigger place again. We consciously decided to get off that treadmill."
Treat your savings like profit
Steve Antonioni, who has saved up "war chests" to fund mini-retirements, recommends thinking about your personal finances like a business.
"I think having the right attitude around savings is very, very important," he said, adding that "even the word 'saving' kind of messes you up from the first place."
People use different terms to describe corporate finances and personal finances. Businesses have "revenue" and "profit," whereas individuals have "income" and "savings." Antonioni finds it helpful to draw a direct comparison between the two.
"A business is trying to earn a profit, right? It's the exact same thing for you — your savings are your profit," he said. "You want to run your life in such a way that you're earning a profit, because that profit is yours. That goes directly to you."
One way to increase your personal "profit" is to make saving automatic before you have a chance to spend the money. That could mean setting up recurring transfers to a savings or brokerage account, increasing retirement contributions after a raise, or separating spending money from long-term savings.
Try a "no-spend month"
Michela Allocca, who quit her corporate job to create personal-finance content full time, prefers setting spending "boundaries" rather than strict rules.
Sometimes, those boundaries are about behavior rather than categories. For example, she avoids shopping on her phone and doesn't keep her credit card near her computer.
"That creates friction in the buying process," she said. If she really wants something, she has to get up, retrieve her card, and make a more intentional decision.
Another strategy she uses is a "no-spend month," in which she sets clear parameters for what she is and isn't allowed to spend on. During one no-spend month, for example, she chose not to buy clothes or beauty products.
"But I am letting myself go out to dinner once a week and spend money on my hobbies," she said. The idea is that setting guidelines for a defined period of time can make spending boundaries feel more manageable.
Slash the Big 3
To substantially increase your savings rate, take a close look at three major expenses: housing, transportation, and food. Often called "the big three," these categories are typically among the largest expenses most households face.
"If you learn how to master those big expenses, it will free up a ton of money so you don't have to stress about the small stuff," said Josh Lupo, who retired in his 30s with his wife, Ali.
The couple used a strategy known as "house hacking" to offset their housing costs. Other ways to lower the big three include sharing a car or using public transit, cooking meals at home, and living with roommates.
Focus on earning more
Cutting expenses can help widen the gap between what you earn and what you spend, but especially in a high-cost environment, increasing income can be another important lever.
When reflecting on the money moves she made in her 20s that helped her reach millionaire status by 30, Allocca said increasing her income was a major factor. After all, there's a limit to how much you can cut, while earning more can expand what's possible.
"The reason I've been able to hit these big numbers is because I increased my income outside my corporate job," she said. "It's not the sexiest thing — not everyone wants a side hustle or to start a business — but that's the big driver."
Still, higher earnings only help if you avoid inflating your lifestyle at the same pace.
"No matter how much you increase your income, you have to avoid lifestyle creep," Allocca said. "Otherwise, you're not actually going to make progress."
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Kathleen is a correspondent at Business Insider, covering investing and the path to financial freedom. She's been writing about personal finance for BI and other publications, including CNBC, since 2015.Her coverage includes the Financial Independence, Retire Early (FIRE) movement, real estate investing, and side hustles. She also occasionally covers small businesses and enjoys writing personal narratives about her own experiences navigating the world of money.Elkins graduated from Williams College in 2014 and resides in Los Angeles. Outside work, she trains for marathons and triathlons in the Santa Monica Mountains.Follow her on LinkedIn.Popular articles:
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