As I was updating my net worth this month I realized that my net worth has increased over $31,000 in the past 12 months. Wow!

That’s over $2,500 a month.

And we’re talking after tax here. I paid $10,069 in federal income taxes, $3,119 in Social Security and $1,077 in Medicare taxes in 2011. That’s another $14,265 I made but didn’t spend (I don’t count taxes as spending).

Of all the money I earned last year, I didn’t spend approximately $45,000 of it. I won’t give out my exact income, but I will say that’s over half of my pretax income.

Let me say that one more time: I did not spend over half of my pretax income last year.

Wow. I’m actually really surprised because I’ve never looked at it this way.

I do realize that I can never spend taxes so I never really had the chance to spend that $14k. I also realize that some of that $31,000 might be from investment gains (although it’s also possible I’ve lost money in the market over the last year, I’m not sure). But even if we take away the taxes and a few thousand for potential investing gains, I still didn’t spend somewhere between $20,000 and $30,000 I earned in the last year.

How did I do it?

As I was updating my net worth this month I realized that my net worth has increased over $31,000 in the past 12 months. Wow! That ended up being over half of my pretax income. Here's how I did it.

Restricted Accounts

First and foremost, I actually don’t have access to a lot of my money. Lots of it is in my 401k, and a good chunk is in a Health Savings Account. I can’t spend that money unless I want to pay big penalties and taxes. Knowing myself I probably wouldn’t have spent it anyway, but restricted accounts are a great way to make sure you save money.

My personal finance teacher in college said to “pay yourself first”. When you pay yourself into a restricted account, it’s probably going to stay there.

My Lifestyle Inflation is Minimal

Let’s compare my life today to my life in college:


  • A job (going to school 9 months, job making money in the summer)
  • A side job (writing)
  • An apartment (with roommates)
  • A 4-door sedan
  • A few hundred dollars worth of electronics


  • A job (salaried position)
  • A side job (this site)
  • An apartment (with my girlfriend)
  • A 4-door sedan (albeit a newer one than I had in college)
  • A few thousand dollars worth of electronics
  • Travel overseas about once a year on a strict budget

My lifestyle has gotten a little more expensive, but I’m pretty much living the same life I was before and adding in one trip a year to a far away place. I don’t let the amount of money I CAN spend dictate how much I DO spend. I just spend what makes sense and save the rest.

Readers: How much of your income are you saving? Has your lifestyle gotten more expensive in the last few years?

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