I remember a time, not so long ago, when paying monthly bills felt like a burden and I was excited to put $50 in my savings. I have 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 pay cheque was pretty small. The issue wasn’t that I didn’t make enough, because I did, it was that always having cash meant it was easier to spend without thinking and 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 salary 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” is 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 $1062.80 in miscellaneous spending! That doesn’t include bills, groceries, gas, etc. and to be clear, this wasn’t a special month, it was very like many other months.
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.
Now that you know the back story, let me tell you how I got to where I am.
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 move sometime in the future and I’d like it to be as simple as possible. I don’t want to arrive with nothing in 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 and all they could afford was that plane ticket and hope 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 take it. 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 1-2 times 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 to $60.
My monthly bills, fixed and variable, total about 49% of my income (on average)
allowing me to
spend save the remaining 51%. 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 everyday 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 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, but 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 change 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 note pad, 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 am anyways.
Spending bans are my next big contributor. I have done seven 1-month long spending bans over the past 2 years and they have contributed nearly half of my total savings! I usual choose my ban-months for particular reasons. Typically I’ll do one for the month before a vacation to help bulk up my account but I also try to do one in the month 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 and others, like when I sold my van, I save several thousand. Any savings is better than no savings so I don’t beat myself.
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 on my monthly grocery budget, which shouldn’t be hard but 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. Everything I’ve done to get to the savings point I’m at has been 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 ok!
Throughout all of this I have still been able to live my life. I’ve made travel a priority and been on many trips, 9 I believe, near, far, budget and expensive. Ryan 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.
