5 Lifestyle Shifts That Allow Me To Save 20% Of My Paycheck Without Feeling Deprived
When I first graduated college, I went out into the “real world” with a minimum-wage-paying job. If you’ve worked a minimum-wage job, then you know that it barely covers the costs of the minimum living essentials. I was living paycheck to paycheck and would daydream about a day in the future when I would have more money. I imagined I would effortlessly save money once I was earning this hypothetical higher income.
Cut to a couple years later when I began working in an office and started making more money. Six months into this job, my savings account was still resting at less than $500.
It turns out that I’m really good at spending money. I’m partly to blame for this, but I also live in a society that values shopping as a means of validating self-worth. It’s not like I am spending thousands of dollars on clothing or travel every month, but when I started making more money, I gradually elevated all of the things I consume. I swapped my $12 face wash for one that cost $35. I got into the habit of buying lunch at work on the daily. I would swing by Nordstrom once a month and spend $200 on new clothes. My spending increased with little conscious effort, and although I was making more than I had been when I was earning minimum wage, I was still living paycheck to paycheck.
Over the past six months, I’ve taken a very critical look at my spending habits. I want to reiterate how thankful I am to be making enough money to live comfortably and save. Every day I am grateful to make more than enough to cover my daily living expenses. Today, I am saving at least 20% of my paycheck without feeling like I’m sacrificing anything important. I’ve just reached my first milestone savings goal, and I am genuinely confident and optimistic that I will continue to save and reach new milestones. The changes I made boil down to five shifts, which I outline below.
1. Read the book Your Money or Your Life
Out of all the finance books out there, I can’t recommend this one enough. Although it was originally published in 1992, it is still extremely relevant today. It’s hard to describe exactly why this book is so powerful, but it is the first source of information that really opened my eyes to the true value of a dollar. The writers do an incredible job of reiterating the point that money is representative of your life energy, and not to be wasted. My relationship with money has evolved so much over the past year, and when I look back at all the evolutions, I credit this book for kicking off that journey.
2. Track Your Spending Without Judgement
I started tracking my spending months before I got into a better habit of saving. I would recommend tracking your spending in detail for 1-3 months. Don’t try to change anything just yet; simply take an honest look at where your money is going. Mint does this automatically for me now, but when I first started tracking, I used a manual Excel spreadsheet. Although it was a bit tedious, it was very powerful to have to manually type out everything I purchased. At the end of each month, I would go through the list and highlight the things that, in retrospect, I realized hadn’t been necessary. This activity helped me develop a deeper understanding of how I spent my money, and also illuminated the many “small” purchases I was unconsciously making every month that I didn’t really need.
3. Open A Separate Savings Account
I used to have a savings account connected to the same bank as my checking account. Every time I checked my checking balance I would see how much was in my savings. This is slightly embarrassing, but for years I would often transfer money from my savings back into my checking. It was almost impossible to keep my savings account above $500. Many financial advisors suggest opening a savings account with a separate bank to help save more, and I finally decided to give it a try. I set up my direct deposit to automatically put 20% of my paycheck into this new account. I only see the balance when I make the effort to log in to the account, and I haven’t let myself figure out how to transfer money from it to my checking. Because this money feels much further away from my checking, I am way less tempted to transfer money out of it to spend. It may sound a little childish to have to almost hide your savings account from yourself, but it’s truly helped me avoid the temptation of spending my savings.
4. Set Attainable Goals
Even when I started working a 9-5 job, after taxes, it was still a struggle to cover all of my expenses. Only recently did I get a raise that has allowed me to truly start saving larger amounts of money. I used to be hard on myself about needing to accrue a 6-month emergency fund, but because I was only able to save about 5-10% at that point, it felt like I wouldn’t reach that goal for years. I’ve learned to set more attainable goals. I typically set savings goals that won’t take longer than about 3 months to reach. This helps me avoid any burnout, and it boosts my financial confidence every time I reach a goal. Because these goals are smaller, adding an extra $50 to my savings account really makes an impact, whereas if I was trying to save $20,000, that $50 wouldn’t feel so impactful. Whether it’s $250 or $3,000, set goals that you know you will be able to reach within a few months!
5. Practice Patience
Patience is the name of the game with money (and life). I feel like I started my journey to get better with money about three years ago, and it’s only been recently that I’ve started to really see all that work start to pay off. It takes time to change habits. It takes time to build your savings. We live in a world where you can get a lot of instant gratification, and it was challenging for me to accept that savings goals can take years to meet.
Be patient with yourself! You will make mistakes. You will accidentally overspend. You will accidentally overdraft your account. You might almost hit your savings goal when suddenly you have to replace the tires on your car. This isn’t new advice, but it’s really critical. Remind yourself to use financial setbacks as learning lessons. Look critically at why you may have overspent, and think about what you would do differently next time. Perfection is not the goal. Sometimes you are going to find a beautiful dress that truly will bring some joy to your life, and you might impulse-buy it. We’re not robots, and mistakes remind us of this. Be patient with yourself, and I promise you that if you want to get better with money over time, you will gradually see progress.
Mona is a writer living in the Pacific Northwest. She likes drinking coffee, summiting mountains, and eating mangos. She is currently writing about all things related to money on her blog monasmoney.wordpress.com.
Image via Unsplash
Like this story? Follow The Financial Diet on Facebook, Instagram, and Twitter for daily tips and inspiration, and sign up for our email newsletter here.