Simply put, we take 20% off the top for savings. So if my salary is $100,000 a year (to use a round number), we budget and spend as though we made only $80,000 a year. The other $20,000 is saved. A combination of 401(k) deduction, stocks, investing on Ameritrade or put in savings towards our "rainy day" money.
Other people call the above concept "pay yourself first."
It does take discipline. For instance, when unexpected expenses crop up, you are tempted to whip out the charge card or dip into the "rainy day" fund, so you don't have to give up your luxuries, but we try to absorb the extra expense within the current pay cycle by making do with less until next payday.
Recent example was my car needed new tires - about an $800 expense. Rather than put the tires on a charge or pull from savings, I paid for them out of our checking account. Normally we like to go out to eat at least 3 times a week but for the next two weeks, we ate at home and experimented with new dishes we could make cheaply, such as broccoli and cauliflower omelettes (pretty good!) and chicken thighs in cast iron pan - finished off in the oven with garlic and mushrooms (delicious). We ended up being able to pay for the tires without having to touch any of our savings or run up a credit card. And we still put the aforementioned 20% aside.
Sometimes we can't cover expenses like that, like when the roof needed to be done (we used up much of our savings for that) but surprisingly we can absorb most "surprise expenses" that pop up without losing a beat.
We are not miserly scrooges either. We prefer to buy quality durable goods, pretty close to top of the line, as they last much longer. I get most of my clothing from LL Bean - expensive but I have sweaters and shirts from them that are 10 years old and they still look good.
However, there are many things that are cheap or free that we do take advantage of. I try to get to my public library at least twice a month and I usually come out of there with 4-6 books. I explore all the local state parks and hiking trails that are absolutely free and will kill an entire weekend afternoon with zero expenditure.
All good ideas.Stopped shopping in Lord and Taylor and shop in tjmaxx and Marshalls for designer stuff my kids like. But now I shop in boutique like thrift shops for myself. Amazing stuff. Past two years I have sold furnishings and clothes on consignment. They love my stuff and we have too much stuff.