Here's a secret about saving money that I learned a long time ago but which took me many years to actually implement: it doesn't matter how much you make, just how much you save.
If you read any of the other personal finance sites, you'll see that a lot of people are saying that right now. It's a pretty well-known "secret". But knowing something and making use of that information are distinctly different. Are you making use of your financial knowledge? Or are you keeping it a secret from yourself?
Saving money requires a change in how you spend. When it comes to saving, it really is as simple as spending less than you make. But that's not really helpful to say.
What appears to be the problem, based on my many years of observing friends and family and myself, is that it really is the little things that fritter away your money. Decide what the difference is between what you want, what you need, and what you actually buy, and it might just get easier to save money. Are what you want and what you need the same? Is there a way you can satisfy both conditions?
Let's take an extreme example. Let's say that you make a long commute to work every day, both ways. There's a hot dog stand near work, and you're so busy, that's all you have time for. You snack on a $3 hot dog at 1:30 pm. Then you're so hungry when you get out of work, that instead of going home to eat, you decide to eat out. (Let's assume that for this example, you're not married, or that your spouse is busy, too, and you have no kids.)
How much are you spending now? Probably at least another $10 for dinner, maybe more? And you're doing this every weekday. That's 5 days x ($3 + $10)/ day = $65/ wk or about $260/ m. Meanwhile, you have groceries in the fridge which are probably spoiling. But you just know that you "can't wait" until you get home to eat. You won't have the energy to cook something. (Or worse, you don't actually know how to cook.) You convince yourself that you'll eat at home tomorrow.
I used to do this, and I calculated that I spent about $600/m eating out, plus the $200 or so I spent on groceries that I actually often ended up throwing out. This despite having thrown a lot of dinner parties, proving my ability to cook. But who wants to eat by themselves? That's often the life of a single person. And I did this for nearly 2 years, because at the time, I was making loads of money. Although, I cringe now about how much money I threw away. I probably could have had a small down payment on a condo with that money. What did I get out of it all? Several extra pounds around the waist that just won't go away for good.
Consider this. Maybe you aren't spending $800/m on food/ meals for yourself like I was. But maybe you are spending $420/m, of which $160 is groceries. That's $260 on meals, as mentioned earlier. Could you get by just going out once a week, spending, say, no more than $15? That would save you $200/m.
Doesn't sound like a lot. But say you put that into a high-interest online savings account each month, many of which are currently paying over 4% APY (Annual Percentage Yield). (Interest rate and payout varies per offer.) You could invest your $200 for a higher return, but you would also have to accept the associated risks and do all the necessary stock market research. You may make more, but your money would not be as liquid as in a savings account.
That $200/m in a savings account still adds up to $2400/yr, plus interest. Enough for a nice vacation every year. Or if you get addicted to saving, which is entirely possible, a few years might bring you enough to buy new car or invest in your own home.
It's the little expenditures that get you. It's like the "wisdom" of eating chocolate cake in crumbs. Crumbs have no calories, so your waistline can afford to eat a lot of crumbs, all the time. Me, I'd rather have a nice big slice once in a while.
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