I remember a time, not so long ago, when paying monthly bills felt like a burden, and I was excited to put even $50 into savings. I’ve come a long way since then and learned so much.
Working in restaurants and hair salons meant I always had cash — the biggest chunk of my income was from tips, and my minimum-wage paycheck was pretty small. The issue wasn’t that I didn’t make enough (I suppose I did), but rather that always having cash meant it was easier to spend without thinking. The bulk of my money never made it to my bank account, never mind my savings. Since then, I have moved to a well-paying salaried job where I never see cash, and it has been so much easier to save.
I don’t remember now why I started tracking my spending or following a budget, but it has been one of the best financial decisions I’ve made. I created a spreadsheet where I tracked every dollar going in and out of my accounts, tallied my savings, and started reading my trends. Having to see, plain as day, how much money I was spending on “miscellaneous” was quite a slap in the face. Just to drive the point home, I looked back on my monthly spending sheet, chose a random month and came back with $1,062.80 CAD ($808.27 USD) in miscellaneous spending! That doesn’t include bills, groceries, gas, etc. And to be clear, this wasn’t a special month — it was very much like any other month.
Now, I’m not going to act like I don’t waste money or shop unnecessarily anymore. I do, but I am much more aware of it and try to make better choices. One of the best ways to do that is moving money from the account attached to my debit card into my savings as soon as possible. Once it goes into savings, it’s off limits. Out of sight, out of mind is one of the best ways to save!
Now that you know the backstory, let me tell you how I got to where I am — having saved $35,000 CAD ($26,617 USD) over the past three years.
My desires and the motivation created by them have likely been the biggest contributor to my ability to save. I am planning for a big cross-country move sometime in the (near) future, and I’d like it to be as simple as possible. I don’t want to arrive with no savings and struggle to get my life up and running again because I can’t afford it. Likewise, I want to travel as much and as often as I can. I hear about people flying across the world while only being able to afford the plane ticket, hoping to figure the rest out when they arrive. That will never be me. And lastly, for my significant plans, I very simply want to live the life I want. When I have children, I don’t want to worry about whether I can afford them; if I decide to go back to school, I want to be able to; if a last-minute opportunity comes about, I want to be able to take it without putting myself in debt. Having a money cushion allows me to live the life I want, not just the life I can afford.
As I’m sure many people do, I make an effort to keep my monthly bills as low as possible and live below what I can afford. When I realized how much it was costing me to drive and park at work every day, I started taking the train. When the city started charging to park at the train station, I took the bus to the train. When I looked at how much I was paying just to have/park/maintain a vehicle that I only drove only once or twice a week, I sold it. I do miss my van and the freedom it afforded me, but it was no longer worth the price I was paying. Similarly, I paid off my phone in full to be able to take advantage of a deal that would lower my monthly phone bill from $100 CAD ($76 USD) to $60 CAD ($46 USD).
My monthly bills, fixed and variable, total about 49% of my income (on average), allowing me to spend or save the remaining 51% as I wish. Sure, I could use that to pay for a vehicle I never use, or more clothes that I’ll wear once, or go out for lunch every day, but I would much rather squirrel it away for future possibilities.
Here’s where that 49% is going:
- 38%: Rent takes up the biggest chunk, but it is also my favorite part to spend on. That probably sounds weird, but living in an apartment that I genuinely love and really enjoy spending time in is well worth the cost. I also include home insurance and my parking stall with rent. I can’t really say if I’m paying a lot, very little, or somewhere in between for rent, because it is so variable depending on where you live. I think it is pretty average for my location.
- 30%: Groceries, that thing we all need but would probably rather spend on eating out, or maybe a private chef… This is the only chunk of my bills that really changes from month to month. I try really hard to keep within the limits I’ve created for myself, but it doesn’t always happen.
- 21%: Transportation includes my city transit pass and half of the insurance and gas for the car I share with my boyfriend. This total was significantly higher not long ago but selling my vehicle and paying off our shared car has done wonders!
- 5%: My cell phone is not only my connection to friends and family, but also my entertainment, camera, GPS, and notepad, among other things. For me, it is worth every penny I pay into it.
- 3%: Electricity. I would say utilities, but everything else is included in my rent.
- 3%: Miscellaneous payments, bank fees, etc. Things I would rather not pay for, but have to anyway.
Spending bans are my next big contributor. I have done a one-month spending ban seven times over the past two years, and they have contributed nearly half of my total savings! I usually choose my ban months for specific reasons such as the month before a vacation to help bulk up my account, or during the month I know I’ll be getting a tax refund (if I do), as well as triple-pay months. One of these months also coincidentally lined up with when I sold my van, so that was a great bonus!
On the very opposite side of the spectrum, I try to keep contributions to my savings account as low-pressure as possible. Some months, I only manage to save $50, because I have that set as an automatic contribution. Others, like when I sold my van, I save several thousand. Any savings is better than no savings, so I don’t beat myself up about low-savings months.
In the process of living life, I’m constantly learning, and money is no exception. For example, I’m still trying to figure out how to stay within my monthly grocery budget, which shouldn’t be as hard as it is. Sometimes, I casually try to figure out how to buy a home — not because I want to, but because the process sounds scary and confusing. I’m trying to convince myself to be more minimal (an ongoing journey) and hoping that having less also means buying less and living more freely. And everything I’ve done to get to the savings point I’m at has been through trial and error, assisted by many internet searches and several YouTube channels.
I figured something else out very recently, and I feel a bit silly having not thought of it before this year. In two and half years of budgeting, I never once included spending money or savings into the equation. The thought did not ever enter my mind. I made sure to cover all my bills, groceries, gas, and my automatic contributions, but nothing else — the rest of my money was free to be spent or saved without a particular goal in mind. True, I was usually pretty good about shuffling some money over to savings, but for a long time, it was just the excess after shopping, eating, and entertainment. Having realized how much I allowed myself to spend in the past, I have finally added a spending category to my budget as well as an amount I know I should be able to save. Sticking to the spending allotment is a work in progress, but that’s okay!
Throughout all of this, I have still been able to live my life. I’ve been on many trips — nine I believe, near and far, budget-friendly and expensive. My partner and I have paid off the car. I’ve shopped for myself, bought gifts, eaten out, and enjoyed concerts and movies. I don’t feel at all like I’ve been held back by saving. I’m very happy with the apartment we live in. I’m not yet tired of the fact that I’ve worn the same clothes for ages. I’m not upset about sharing a vehicle. I’m actively creating the life I want to live by living in a way I’m comfortable with, and for me, that has huge value.
Dani is a 26-year-old Canadian blogger at Out Of The Nest Travel.
Image via Unsplash