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  • I grew up in a penny-pinching household and kept it up when I moved out on my own.
  • Living frugally helped me save $5,000 in a year when I was earning just $30,000. As my income rose, I didn’t let my expenses rise with it.
  • That’s when I had a lightbulb moment: The key to building wealth and savings isn’t frugality or increasing your earning potential, it’s a smart balance of both.
  • Find out what a financial planner can do for you with Personal Finance Insider’s free e-book »

Growing up in a single-parent household, where the state of our finances waxed and waned, my mom was incredibly frugal. We’d go to Big Lots to buy sundry food items and school supplies, and I wore hand-me-downs from an older cousin. 

From an early age, I made the connection between frugality and abundance. I also made the connection of not having enough money to stress and anxiety. In turn, I turned out to be quite the penny-pincher. And being that way helped me save aggressively.

When I was in my early 20s, I lived well within my means and managed to save $5,000 within the first year of living on my own in Los Angeles. At the time, I was earning a salary of $30,000. For the first decade or so of being gainfully employed, I practiced an extreme form of frugality.

Because of my extremely frugal ways, I was able to keep around $10,000 in my emergency fund and set 12% of each paycheck toward retirement. But it wasn’t until I was in my early 30s, when I got a new job and received a $10,000 bump in pay, that I was able to make more serious headway with my savings. Within three years, my emergency fund went from $10,000 to $40,000. 

That’s when I had a lightbulb moment: Building wealth and saving money aren’t just about earning potential, they require a combination of being frugal and finding ways to rake in more income. Here’s how I’ve found a balance and built my savings.

I kept my lifestyle the same

Before I had my big $10,000 jump in pay, I received incremental raises at work and occasional end-of-year promotions, but I kept my living expenses roughly the same. In fact, there were times when I cut back on my spending. 

For instance, during the Great Recession, I went through my expenses, line by line, and checked to see which ones I could lower. Even though I was fortunate to still have a job, I knew that it was important to save as much as I could. I wrote a letter to my landlord to ask for a temporary pause in my rent, and she agreed.

For 13 years, I lived on my own in Los Angeles in rent-controlled apartments. A bump in pay didn’t translate to upping my lifestyle with a more spacious place or a new car. It meant more money to put toward my emergency fund.

I made frugality fun

As I earned more, being frugal wasn’t as much of a necessity to save, but it certainly helped me achieve my goals quicker. Frugality to me, for the most part, was about resourcefulness. I didn’t typically see it as a path toward deprivation, but rather as a way to see novelty and possibilities. For instance, how could I make use of a certain kitchen appliance in five different ways rather than purchasing multiple appliances? 

Also fun? Calling my cell phone and home internet providers and seeing what discounts I could snag. One year I brought my internet bill from $60 to about $30 a month, which saved me $360 over 12 months. I know that negotiating a lower rate can be a drag for some, but I find sublime joy in going for the ask — especially if it means a year of savings.

I side hustled to boost my earnings 

When I had a day job, I side hustled in the evenings and on weekends. These were usually fun, relatively easy jobs, such as test proctoring and pet sitting. I also took on side gigs doing copyediting, copywriting, and writing articles for various companies.

Often, I could double up on the side hustles. In other words, I could do two side hustles at the same time. For instance, when I took care of my friends’ cats and dogs while they were on vacation, I could also get some writing done. And sometimes during test proctoring,during lulls, I could get some computer work in.

I didn’t work every month, but over a year I usually raked in a few thousand from my side gigs. This extra money would go toward one of my money goals. One year I put that money toward a new computer and vacation. Other years, I put that extra money toward saving for a new car or toward an emergency fund. 

I set my savings on autopilot

Because I kept my expenses the same despite earning more at my day jobs and through side hustles, I auto-saved for a rainy-day fund and a new car fund. I committed to saving a set amount into both accounts every month. When I made “extra” money through a bonus or side gig, I would save a percentage. Having separate accounts for each of my savings goals made it that much easier to stay on track. 

As you can see, it’s not a black-and-white argument whether you should penny-pinch or focus on boosting your earning potential. In my experience, I’ve found that doing a bit of both could help you move toward growing your personal wealth.

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