4 Secrets of People Who Save More Than 20% of Their Income

Super saver
Photo by Algonga / Shutterstock.com

Want to achieve financial independence? Not only should you avoid keeping up with the Joneses, but you probably are best-served by going in their exact opposite direction.

People who save more than 20% of their income engage in financial behaviors that are far outside the norm in America, according to a recent survey from TD Ameritrade.

After all, these “super savers” manage to sock away 29% of their income, on average. Non-super savers, by comparison, save 6% of their income.

That determination to scrimp and save pays tremendous dividends: 3 in 4 super savers are either financially independent now, or on the path to join that club, TD Ameritrade says.

That compares to less than half of folks who aren’t super savers.

How do these super savers do it? Most are focused on achieving financial dependence, and many plan to retire early. That helps them keep their eyes on the prize.

In addition, they have the following financial habits in common.

65% avoid high-interest debt

High-interest debt is one of the most toxic poisons to building wealth.

We often hear about the value of compound interest in helping us achieve long-term financial goals. But debt turns compound interest into your enemy. Instead of seeing savings grow exponentially, your debt itself expands aggressively.

Make minimum monthly payments at a high interest rate, and you will shell out several times the purchase price of your item before it’s finally paid off.

Need some inspiration before tackling your debt? Check out “How to Pay Off $10,000 in Debt Without Breaking a Sweat.” Need professional help overcoming your debt? Consider seeking out a reputable credit counselor.

60% stick to a budget

We get it: Budgets are boring. But excitement is not everything it’s cracked up to be. Wouldn’t you embrace a little boredom if it meant a life without money worries?

If you need help budgeting or tracking your spending, consider using an application like YNAB (You Need A Budget). It’s designed to help you create and live within a realistic budget so you can stop living paycheck to paycheck and start paying off your debt and saving more money.

58% invest in the stock market

The stock market can be a scary place: Just think back to the 20% swoon that stocks underwent during the last few months of 2018.

The stock market can also be a thrilling place: Witness the 15% rebound in the first few months of 2019.

Our advice is to tune out the highs and lows and stay focused on the long run. Odds are that the stock market is your best bet for building the type of wealth that creates financial independence over time.

One more tip: If you plan to invest, start early in life. TD Ameritrade found that 54% of super savers began investing by age 30, and 30% started by age 25. By contrast, just 39% of other survey respondents were investing by age 30.

For more guidance, read through “8 Basics That Beginning Investors Must Know.”

55% max out their retirement savings

Life is expensive, and many of us struggle to pay our monthly bills. Contributing even a few dollars to a retirement fund can be difficult. So, the notion of making the maximum allowed contributions might seem like pure fantasy.

But folks on the path to financial independence know they must sacrifice things today to be financially secure tomorrow.

Giving up a small vacation, skipping a few restaurant meals each month, buying a less flashy car — these are the sacrifices that super savers make every day so they can invest for the future.

To learn more about things you should avoid when saving for retirement, check out “7 Mistakes Guaranteed to Ruin Your Retirement.”

Are you a super saver? Share your tips in comments below or on our Facebook page.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
How to Stop Living Paycheck to Paycheck in 8 Steps
How to Stop Living Paycheck to Paycheck in 8 Steps

Does it feel like your paycheck is gone the moment you get it? You can break that vicious cycle.

70% of Older Adults Botch This Basic Retirement Question
70% of Older Adults Botch This Basic Retirement Question

Can you answer this fundamental retirement income question?

8 Things I Always Buy at Costco
8 Things I Always Buy at Costco

From bacon to birthday cakes, here are my favorite deals at the popular warehouse store.

5 Ways Retirees Can Lower Their Income Taxes
5 Ways Retirees Can Lower Their Income Taxes

Here’s how to keep Uncle Sam’s mitts away from your nest egg.

4 Streaming TV Services That Cost $20 a Month — or Less
4 Streaming TV Services That Cost $20 a Month — or Less

Here’s how to ditch cable and satellite TV — and save a bundle — without giving up your favorite shows.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
Social Security Checks Likely to Grow This Much in 2021
Social Security Checks Likely to Grow This Much in 2021

The federal government recently released a key statistic that gives clear insight into what next year’s COLA will be.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

21 Things You Should Always Buy at a Dollar Store
21 Things You Should Always Buy at a Dollar Store

Dollar stores have great bargains on both everyday and occasional purchases.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

7 Unusual Ways to Declutter Your Home
7 Unusual Ways to Declutter Your Home

Tired of possessions weighing you down? Here are seven ways to declutter painlessly and effectively.

This Is the Most Popular Age for Claiming Social Security
This Is the Most Popular Age for Claiming Social Security

Both men and women are most likely to start receiving Social Security benefits at this age.

6 Things You Should Never Buy at Trader Joe’s
6 Things You Should Never Buy at Trader Joe’s

We love Trader Joe’s for plenty of reasons. But think twice about this handful of products.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have these documents that are crucial to their golden years — especially during a pandemic.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

Eat This Food If You Want to Avoid Alzheimer’s Disease
Eat This Food If You Want to Avoid Alzheimer’s Disease

One type of food associated with the Mediterranean diet offers especially large benefits.

5 Awesome Places You Can Retire Overseas on $2,000 a Month or Less
5 Awesome Places You Can Retire Overseas on $2,000 a Month or Less

In this week’s podcast: tips on retiring overseas — from someone who’s been helping American expats for decades.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

9 Dumb Ways You Are Ruining Your Home Value
9 Dumb Ways You Are Ruining Your Home Value

Homeowners, beware these mistakes that can drive away potential buyers.

18 Amazon Purchases That We Are Loving Right Now
18 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.