7 Money Lessons I Followed To Save $80,000 in One year
Any day is a good day to save some extra money
For many, COVID-19 was an uncertain time, but for some, it gave an opportunity to rethink finances. Near the end of last year, my trip to Japan was canceled. With our local government announcing that they would cancel overseas travel in Australia, I was stuck with no place to go.
This moment raised a lightbulb in my head, and I realized it would be a great time to focus on money, especially with a significant expense like traveling out of the picture. I decided to focus on making more money and, of course, saving that (on top of my salary).
A year has since passed, and I learned a lot during the experience. I even kept a spreadsheet to see how much exactly I saved during the time.
Of course, I do make a full-time income, so some of the savings would come from earning a wage. I wanted to address, however, at least principles you can follow in your own journey to making and saving more money.
Firstly, set yourself a realistic financial goal with a reason
I’m a goal-oriented person, and in my opinion, it’s a lot easier to achieve your financial goals when you have an aim. Generally, you know how much you make per month, so setting a plan to save more is more manageable. Just work backward and then set yourself a savings goal.
Of course, on top of this, you can also budget, which does help immensely, so get a spreadsheet out and start documenting it down.
I personally also found that having a reason to save also helps a lot. Without motivation, it can be aimless, and I found myself wanting to save more when I had a reason to do so.
My personal reason was to save for a home loan deposit, so I simply had to work backward to figure out how much I needed to make and save after a year.
You need to make more money to save more money
Relying on your job is one lesson many learned the hard way during COVID-19. On a positive note, this also meant many realized that they needed spare income sources.
After working backward in my calculations, I realized I needed to make more income to stay on the safe side of my annual financial goal.
How you come up with these income sources is entirely up to you, but there are many things to try. I personally tested at least 15 different types of income sources from Youtube, writing, freelancing, and even e-commerce.
In my opinion, we’re fortunate to be living in a creator economy right now, so do some experiments and see where you end up.
Also, focus on scaling your income sources instead of focusing on ‘passive’ income strategies. Once you find something that’s potentially working for you, spend more time on it so you can scale it out.
Lastly, set yourself a minimum goal to reach every month and try to beat it each month.
Cancel irrelevant subscriptions
Ok, I’m adding this one because, for some reason, we always find a reason not to cancel them.
I always seemed to justify these subscriptions, and like a bandaid, I needed to tear it off to move on.
After canceling these, I realized how much money some of these subscriptions were adding up. By itself, one doesn’t seem much, but when you add all of these in a total, you could be losing hundreds a month.
I personally had an Adobe creative license which I justified because I was editing videos via Adobe Premiere. However, this meant I did not need to keep a full license if I was not going to use any of the other products regularly.
I finally downgraded and realized how stupid I was and have since canceled many other subscriptions to save more money.
Take advantage of every free deal you can get
This might be over the top, but I saved a whole bunch, hunting down free deals and trials for things that could cost money. This included tools for my own business and hustles, among other things.
Instead of paying $40 a month for a tool, find an alternative that’s free or uses a full trial to milk as much out of it as possible.
Here are some examples to get you thinking:
Use Canva instead of Adobe Illustrator / Photoshop
Mailchimp instead of every other mailing tool
Join startup programs like Segment, Y-Combinator Startup School to get access to free credits for different tools
Use free trials where possible and milk as much out of it as possible — for example, with VidIQ. I compiled a massive spreadsheet of keywords for possible video ideas before canceling
To put this into proper perspective, I managed to find and fund myself a variety of tools that probably saved me close to $10 000 (including really popular tech tools that usually cost hundreds or thousands).
Yeah, maybe I went a bit overboard, but I still saved a tonne.
Find a buddy to do it with
If you don’t have a partner, find a buddy to do this with.
It’s actually a lot more motivating when you have someone to do it with, and I found having a buddy gave me more motivation to continue with my financial goals.
Of course, it’s understandable if you’re not comfortable sharing financial information with others. Still, in today’s day of age, I personally feel like there’s nothing really to hide with so much information online.
Ask for a pay rise if you have the luxury to
Sorry to all the solo entrepreneurs for this point, but if you have a full-time job, perhaps it’s time to ask for a pay rise.
It’s probably the easiest way to actually get a cash injection as long as you’re proper with the process of asking for one.
If you have enough tenure, set up a meeting with your manager with a clear plan, reasons why you should get a pay rise, and ask for the amount you want.
With many businesses freezing or cutting payroll during the earlier stages of COVID-19, it’s actually an excellent time to ask now since we’re already swinging into somewhat of a post-COVID-19 living arrangement.
I personally managed to get a pay rise, so that’s always handy.
Investing is important — short and long term
During the one year, I invested heaps and took time to learn a lot about trading. Although I had dabbled into it over the years, I never took it too seriously. I decided to finally put more time into it, including learning how to read technical analysis and more short-term trading strategies.
Of course, I still mixed it up with more longer-term trading strategies as well.
However, I realized my own risk appetite was considered ‘riskier,’ so I wanted to try my hand at more different types of investing. I put aside a bunch of cash every month for both short-term trades and longer-term investments.
Some of my shorter-term trades performed relatively well but it also takes a lot of energy to maintain a watch and to keep up with the news. I have since focused more on a longer-term strategy and have sold out most of my stocks to take profits to save for my deposit.
One year later — I hit my goal and beyond it
I managed to hit my goal in October 2021. With this, I am looking for my first home, so that’s an exciting part of my life.
Being able to be financially savvy, especially with your own expenses and savings, will always benefit you in the long run. If you haven’t been thinking or looking at it, perhaps it’s time to inspect and give yourself a financial goal.
Hopefully, you’ll be able to hit them one step at a time.
Contributed by Richard Fang
Read More: The 4 Soft Skills That Will 10x Your Career