What a Debt-Free 30-Year-Old Does With Their Money
The journey towards financial stability is ever-changing and has so many variables depending on many controllable and uncontrollable factors.
The journey towards financial stability is ever-changing and has so many variables depending on many controllable and uncontrollable factors. Three years ago, I lost my job and faced unemployment for a number of months. The experience was eye-opening and brought to light many things I could have been doing better to protect myself financially. It also highlighted the things I was doing quite well at. Every individual’s journey is different, but what has helped me along the way is learning from other people and adopting and tweaking their methods to best suit my situation.
Keeps a simple budget
Over the years I have developed many elaborate and detailed spreadsheets outlining everything I plan on spending and saving. However, I found this overwhelming to keep up with. The best method I have found is a simple budget note on my phone.
My budget is broken into the following categories:
- Rent
- Groceries
- Gas
- Public transport
- Automatic payments e.g. insurance, subscriptions, gym membership
- Investments
- Savings
- Social
Every category has a fixed amount attached to it based on what I spend on that category. The total of all the categories combined equals my monthly income. I try not to underestimate my spending in each category to avoid getting caught short.
Repays debts
In April 2020 I made my last payment towards my student loan just shy of 5 years since I completed my studies. This was a very exciting time for me, as it resulted in me becoming debt free. I try to avoid spending money I do not have, since paying off my student loan I have not purchased anything that I didn’t already have the money for.
When I was a student, I would work full-time over the summer which meant a percentage was automatically deducted from my paycheck to go toward my student loan. I had the option of stopping the deductions from my pay while I was only working full-time for a few months. However, I chose not to. As I was already making more money than I would have been during the semester the amount taken from my pay did not affect my budget in any way, and I was making a good start toward paying off my loan. This gave me a good head start toward paying off my loan.
Invests in saving schemes
When I got my first job as a teenager, I made sure I was signed up for a work-based retirement savings scheme. For 12 years I have been making regular contributions to my chosen provider and my employer and the government have also been contributing. As well as retirement, the scheme I am part of allows the money to be used towards the purchase of a first home. After 12 years of investing, the account is starting to look quite good.
Ignores pay rises
Whenever I get a pay rise the additional income I receive goes straight to my savings and investments. The logic behind this is the fact that I have been getting by just fine on the same budget for years, so there is no need to increase my spending for the sake of it.
Lives below their means
To put it simply, living below you means spending less money than you earn.
- My partner and I have the means to live on our own, but instead, we choose to rent a house with our close friends. We split the rent and get to live in a great part of the city.
- I don’t buy new things very often. Whenever there is something that I need I can usually find it second-hand at a much lower price.
- When I make large cash purchases, I always make sure that I have over the required amount before I purchase the item to avoid bringing my savings to zero.
I am always looking at how I can level up my financial stability and know that there will be new elements in my life that will require me to adapt and adopt the way I manage my finances. It is important not to compare your situation to others but take away the pieces that may be useful to you now or in the future.
