How I Saved $50,000 by 24 Years Old
Before I got over the fear factor of investing, I was saving a minimum of 50% of my income through being conscious about my money making decisions. In 5 years, I was able to save $50,000 AUD whilst not compromising my lifestyle of going to music festivals and travelling.
Below are 3 actionable takeaways which can help you save more money, no matter if you make $10 or $100,000.
1. Pay First Yourself
“Pay first yourself” is a concept where the first thing you do when getting a paycheck is setting aside a percentage for savings, an emergency fund and/or investments. Personally, I put this in a high interest savings account which was not connected to my debit card. This meant I never saw the money, and thus, didn’t have the urge to spend it. At the end of each month, if there was any money left over, I would transfer that as well.
2. Track Your Expenses and Create a Budget
I completely understand that tracking your expenses is a daunting task because you realize how much money you spend on stupid things.
When I tracked my expenses, I was surprised to see I was spending upwards of $500 on eating out and $40 on bubble tea a month ! I was sad and disappointed in my spending habits, but it gave me the insight to see where I can make changes and create a realistic budget for myself. For those unexpected circumstances, this is where “pay yourself first” comes in handy to ensure you don’t go into unnecessary debt.
3. Know Your Priorities
Where and what you spend your money on matters. Understanding this will help you spend money on what is important to you and identify areas you can save in.
For example, when I realized how much I was spending on food, I made a conscious decision to cut back. I did this by:
- Bringing food for lunch (Saved $3600 per year)
- Not getting a morning coffee, but still walking down with my colleagues and having a water bottle in hand. This minimized the awkwardness of walking with them and not having a drink. (Saved $720 per year)
- Only having one drink after work with colleagues instead of the usual 3–4. (Saved $2,160 per year)
- Eating dinner at home at least 4 days of the week. (Saved $6,240 per year)
These small steps collectively saved me $12,720! This money can be redirected to things I care about such as savings, holiday or attending a music festival. Now, I am not saying I followed this to a tee, because I didn’t. There were times I did get a morning coffee, had 3–4 (or even more) drinks etc. however, the difference was that I was not making this decision unconsciously like before. I was aware that by doing this, I could potentially go over budget and thus would need to cut my spending in other areas.
I hope this has helped you think about your relationship with money. Being intentional with how you spend your money will help you make the right financial decisions.
