Saving money can be difficult, especially when you’re young and retirement is the last thing on your mind.
That was the mentality that I had when I landed my first career job as an Information Technology intern at a reputable bank.
I remember the moment when I got my first paycheck. That Friday I went on a shopping spree with my friends.
We were living in the moment and the thought of saving money was far away from our minds. 🙂
But that moment was short-lived. Impulse shopping has caused me to live paycheck to paycheck.
I wanted to change because living like that was exhausting.
On top of that, I realized that there were other things that I valued more than wasting my hard-earned money on material things.
So I challenged myself to start saving money for the greater good. And by the time I turned 25, I was able to save $100k cash while on an entry level income. 😀
Today I’m going to be sharing with you the 15 tips that helped me save $100,000 so that you can start saving for your first pot of gold!
1. Change Your Mentality
To make life altering changes, you need to change the way you think.
People always tell me about how crappy their job is and that they are not making enough money to afford anything.
But remember when we were in university and we didn’t need much money to get by?
Well, that’s because as we get older our lifestyle gets inflated as we make more money.
The truth is, we’re all making plenty but our desires to buy more things grew bigger.
Unfortunately, people like this end up spending so much money trying to keep up with the Joneses.
Being able to afford an abundance of things should be an option, not slavery.
Stop wasting your money on things that cost you and start investing your money into things that pay you.
What do I mean by this?
If you buy a lot of things to satisfy your desires, then you’ll forever work as a slave for money. On the other hand, if you are smart about what you buy, then your money starts working for you.
Doesn’t that sound so much better already?! 😉
Train yourself to have a right mentality to save $100,000 and you’ll find that saving your next $100,000 will be practically inevitable!
2. Create A Budget Plan And Stick To It
Figure out your income(s), savings, and expenses per month to establish your monthly budget.
If you’re new to budgeting, a quick way to start is by using the 50/20/30 rule.
What is the 50/20/30 rule?
It’s basically splitting up your monthly expenses and savings into the following categories:
- 50% fixed or essential expenses
- 20% savings
- 30% variable or non-essential expenses
Once you get comfortable with the idea of budgeting, change it up as you cut more out of your expenses; it could be 40/40/20, 50/40/10 or whatever works best for you.
Just start and get used to the concept of budgeting!
3. Track Your Spending
If you want to spend less and stick to your budget, a good way to do that is to track all of your spending.
Seriously, I mean … EVERYTHING!
If you have no idea where your money is going, it’s going to be difficult for you to find opportunities to save.
Try using a money management tool like Mint. Keep a record of everything you buy, whether it’s food, clothes, new toys or that $1 soda you bought at the vending machine. The idea is that if it’s costing you money, it’s going to be eating into your monthly budget.
So if you’re already saving for something else better, you’ll think twice before splurging on something that you don’t need.
4. Differentiate Between Your Needs And Wants
Try to understand the difference between “items that you need” and “items that you want”.
- An item that you need is essential for survival.
- An item that you want is driven by desire.
For example, if you just moved into a brand spanking new place and the only thing you’re focusing on is how you’re going to decorate it so it looks like it came out of HGTV or a catalogue. Then you really need to stop what you’re doing and determine what you really need before you start splurging on what you want.
You need to make sacrifices. No one said this was going to be easy.
Think twice before you buy anything and evaluate them based on your lists. If you don’t need it, just walk away.
5. Stop Eating Out And Learn To Cook Like A Boss
When I used to work from the office, I would always eat out for lunch with my coworkers. I then realized how much money I could’ve been saving if I would’ve just eaten at home or brought my own lunches.
Here is some simple frugal math to show how much I was roughly spending each year:
Assuming there are 20 working days in a month:
- $5 Coffee – $5 x 20 work days = $100 / month; $1200 / year
- $15 Lunch – $15 x 20 work days = $300 / month; $3600 / year
- $20 Dinner – $20 x 20 work days = $400 / month; $4800 / year
That was almost $10,000 right there!
What a waste, right?!
After this eye-opening revelation, I started to learn how to cook like a professional chef. While I’m definitely not profesh at cooking like Gordan Ramsay, I certainly know how to cook in a way that makes me crave for more.
By making more mouthwatering and eye-pleasing meals, eating out became a less attractive activity to do on a daily basis. It’s so much healthier when you cook your own food because you know exactly what you’re putting in them. Overall, it’s a win-win! 😀
6. Avoid Grocery Shopping On An Empty Stomach
To make those delicious meals at home, you’ll need to shop regularly to buy groceries. Something that prevented me from buying too much food was to not do my grocery shopping when hungry.
When a person is hungry, they tend to make decisions base on their stomach. If you need to go to the grocery store, try eating something first. That way, not everything in the grocery store will look so good to you and you’ll be able to just buy the items that are on your list.
7. Cancel Unused Memberships Or Subscriptions
Are you still holding on to that [fill in the blank] membership or subscriptions that you barely use? If you’re not using it, then why not get rid of it!? Just by getting rid of those monthly subscriptions, you can save tons of money.
The less money you spend, the more money you can save towards your future investments! So, what are you waiting for?! 😉
8. Remove All Your Credit Card Information From Shopping Sites!
To save money, you’ll need to make spending money as difficult as you can. Part of the reason that I was shopping online a lot was because I would allow shopping sites to save my information for future use; that’s seriously how they get you and make you come back to spend more!
After removing all my credit card information from online shopping sites, I noticed that it was so much easier for me to follow my budget and only buy the things that I need.
9. Automate Your Savings And Pay Yourself First
Setup your account so that whenever you get paid, it automatically transfers a fixed amount of money from your chequing account into your savings account. This is where you learn to pay yourself first because no one else is going to care if you put money towards your own wealth, other than you; not the bank, not the credit card company, or anyone else, but you!
This fixed amount of money will depend on how much income and expenses you have each month. Start out with a small savings rate like 20% and then increase it as you get more comfortable. In the meanwhile, try to cut more expenses out of your monthly lifestyle to maximize your savings rate faster.
Automating your savings is the easiest way to trick your mind into saving more money, without much effort.
10. Create Additional Income Streams Or Make More Money
Learning how to save a big chunk of money is a great way to start growing your wealth, but what’s even more important is how you invest it.
Start by looking for ways to create passive income, rather than continuing to trade your work for $$$. Find an investment vehicle that you’re comfortable with; something that allows your money to work for you instead! Whether it’s starting a business, creating an app, do side jobs or anything else you can think of; the sky is the limit!
For me, I chose real estate investing as my passive income stream, simply because all you need to know is basic math and be a bit fearless. 😉
The more income you have, the easier it will be for you to accumulate your first $100k, second $100k, and so on.
11. Set Goals
You’ll be amazed at how productive you become once you start writing down your goals! Try writing a few short-term, mid-term and long-term goals.
Here are some examples of the type of goals I would write down:
- Personal Finance – Save x amount by [date]
- Real Estate Investing – Buy a property that generates x amount of cash flow by the end of 2016
- Cooking – Learn to make a mean lasagna that is carb-less using vegetables this week
- Research/Self-Study – Research about finding a good tenant this weekend
- … so on
I’ve listed a few here just to give you an idea. Try setting your goals with a due date; a date that will motivate you to accomplish that goal. Remember to be realistic.
Once your goals are set, refer back to them daily to check your progress. If you’re falling behind, then tweak your lifestyle a bit to see what you can do to encourage yourself so that you can meet your goals.
Try visualizing yourself meeting those goals and soon you’ll be crossing those goals off like there is no tomorrow!
12. Carry Either Cash Or Credit Card, Not Both!
It’s very rare that you’ll catch me walking around with cash in my wallet. Some people might argue the opposite, but this is the way that works for me.
Here are few reasons as to why I don’t carry cash in my wallet:
- When I have cash, I tend to spend it without thinking much about it. This risks overspending, because when I’m down to $0, I’ll have to get more.
- Credit card statements will keep track of all my activities, so I don’t have to keep the receipts. But with cash purchases, I have to keep the receipts for tracking purposes.
- Rewards or cash back bonuses when using credit cards to pay.
- If my wallet gets stolen, there would be no cash to lose.
- Cash carries so much bacteria… Just simply gross. (I’m sorry if this offends anyone. Does anyone else feel this way? 🙂 )
Now, these are just some of the reasons why carrying cash doesn’t work for me.
However, if you’re one of those people who lacks self-control with credit cards, then I do suggest to carry only cash. Keep in mind that you should only carry cash that is in line with your monthly budget, so you don’t accidentally go over budget.
13. Clean Your Closet And Sell Unused Items
Start de-cluttering and practice minimalism!
At some point in my life, I realized that I had way too much stuff and was practically becoming a hoarder. So… I started selling anything that people would buy.
Ebay and Craigslist were my go-to’s for selling my stuff. From this, I was able to get almost $500 back instead of just hoarding those items at home.
14. Reward Yourself Periodically
It’s important to reward yourself in between your goals. Try setting mini rewards in between your goals so you don’t burn out before you get to the finish line!
For example, if your goal is to save $100,000 then set a goal checkpoint at 10k, 25k, 50k and so on. This way it motivates you to continue without draining you out completely.
I’m a “work first, enjoy later” person, so throughout the year I would take trips after meeting my big goals. This way I can snap myself out of the “business” mode and just relax.
What snaps you out of your work mode? 🙂
Keep in mind that these trips are planned within my budget throughout the year, which tells you that you can really have anything you want if you just spend less on your non-essentials and more on the things that are more valuable to you.
15. Check Ebates For Cash Backs When Shopping Online
When I do my shopping, I try to do most of them online because it’s so much easier. The best part about shopping online is many companies works with Ebates to offer you cash back on your purchases!
Every time I shop online I would always check Ebates first, then connect to the site that I want to go to through there.
Your payment cheque gets automatically sent to you periodically. It will come in either a cheque, PayPal deposit or Amazon gift certificates. I select PayPal because I can just transfer the money directly into my bank account after getting paid.
Bear in mind that I’m definitely not encouraging you to shop till your drop just to get the cash backs. This is only to help you get some money back for those times when you do want to reward yourself after all your hard work to save money!
Now you’ve learned all these awesome ways to save money, you must apply them into your everyday life! Always be reasonable with your spending so that you’ll be more likely to stay within your budget. You want to constantly look for ways to cut expenses, plan to save big and aim to invest even bigger! Don’t forget to give yourself a big pat on the back when you’ve met your goals; whether it’s going on a trip, go to a spa, go on a mini shopping spree, any rewards that make you happy. 🙂