When I was younger, I didn’t think it would be possible for me to say one day: “I’m able to save 50% of my income”. I lived paycheck to paycheck. I didn’t save money at the end of each month; I had nothing left in my bank account. I had a savings account just for holidays, and after each of them, I didn’t have anything left in this account.
And I was in this situation for over a year after my graduation. At that time, I was 25 years old (long studies ^^), and I had just started my “adult life.”
I knew I didn’t want to retire at 65 because I knew that it wasn’t my dream job, and I wanted to enjoy life before retirement. So I started to be interested in personal finance and financial freedom. I immediately knew that I wanted to reach financial freedom in my life. I didn’t want to stop working, but I didn’t want to live paycheck to paycheck, and I wanted to work whenever I wanted.
Now I’m on my path to becoming financially free. I’m not a really frugal person. I just spend money on things that really matter to me: holidays, experiences, and health.
To reach my financial freedom, I needed to save money and invest. So here’s what I did/do right now to save 50% of my income.
I did a financial audit
I think it’s this step that is the hardest. See what you waste your money for is not the most pleasant moment… But it’s the most eye-opening one!
It’s the most important step in this process. You need to know where you start to know where you’re going.
To give you a little bit of context, sometimes, I didn’t want to open my bank app because I was too afraid to see what I had left in my bank account. When you have this feeling, it’s a sign that you need to do something with your finances!
So I printed my 3 last month’s account statements, and I highlighted all the expenses that I didn’t really remember or that weren’t really necessary (clothes I didn’t need, a take-out because I didn’t want to make dinner…). I also checked all of my subscriptions, and I had surprises!
I also highlighted in another color all the mandatory expenses: rent, electricity, public transportation…
Then I did a quick calculation, and I saw the amount of money I was able to put aside every month. I was shocked!
Because I had money left for the rest of the month, after all of my mandatory expenses had been paid, I told myself that it was ok to spend it. That’s why I did the second step.
I automated my transfer at the beginning of the month
I knew that if I didn’t see my money in my account, I wouldn’t spend it. So I created automated transfers for the beginning of each month. I made a list of all the mandatory expenses, an estimation of what I spend on food, and I left an amount of money for my personal expenses. With that, I knew what I could put aside every month.
I opened two investing accounts, and I also created an account for my emergency fund. In the beginning, I put more money into the emergency account, but I also contributed a little to the investing accounts.
I created transfers for each of these accounts, and at the beginning of each month, when I have my paycheck, then immediately, the money is transferred.
I continue to check my automated transfers. Because I had just bought an apartment, I needed to have more money in my bank account, so I lowered my contribution to the savings accounts. When I finish paying for everything I need, I’ll increase my contribution. It’s not because you decide to be “aggressive” with your money and put a lot of money aside that it will last your whole life. Depending on your needs, you can change it whenever you want.
I asked for a salary increase
Saving is great but increasing your income is also really important.
Some people live paycheck to paycheck even by earning 100.000 every year. And some people save a lot of money with 45.000. But it will be more difficult to save 50% on a low income.
At a time, I realized that I wouldn’t be able to leverage my investments with my salary only. Cutting my expenses wasn’t enough to reach my financial freedom. I didn’t want to be extremely frugal to reach my goal, so the only other way to do it was to increase my income. At that time, I had just changed my job, and I wasn’t really confident to ask for a raise. So I decided to create this blog to share my tips about personal finance, self-growth, and minimalism. I earn a little money. But then, I observed my field and how people were paid around me, and I felt totally confident to ask for a raise. I was totally underpaid, and in one year, I was able to increase my salary by about 1.000 euros every month.
So don’t be afraid to see what’s happening around you and in your field. You need to be more confident with your skills, and you must be paid up for your work.
I didn’t buy my apartment at the maximum of my capacity
With the real estate market right now, if you want to have a decent home, you need to spend a lot of money. When we wanted to buy two years ago, we searched for an apartment to the full of our financial capacity. Finally, we found the one that we have just now (the building wasn’t built yet), which was 50.000 euros lower than our full capacity amount. So now, with our increased salary, we can pay the mortgage, save money and enjoy life without worrying.
About your financial capacity, I read something interesting a month ago about money. If you ask yourself if you can afford something (a luxury bag, holidays, or a car), that means “don’t buy it” because you can’t afford it. Even if you have the money in your bank account, if you ask yourself this question, it’s because in your subconscious, you know it’s not the right thing to do. So think about this the next time you want to buy something.
So many times, I asked myself this question about clothes, luxury shoes, or whatever, and every time, it was a waste of money.
I became a minimalist
I’m not an extreme minimalist, I own things, and that’s okay. I love clothes, so I have clothes.
But I only have things that I love. I do things that matter to me, and I say no when I don’t want to. I don’t want to be in instant gratification all the time, and I know that I’ll be happier to have enough money in my bank account to travel than to have yet another t-shirt in my closet.
And because I’m a human, I try as much as possible to avoid all the marketing things on Instagram or whatever. I know that when I’m bored, I buy. So the goal is to do free things, like reading or watching TV Shows or walking in nature. And when I want to be creative, I write blog posts!
If you want to become a minimalist but don’t know where to start, you can find my free guide with five easy steps to become a minimalist!
What I want to do in the future
In the future, I want to be able to increase my income to save more money. I want to invest in real estate and have a side hustle. I hope you guys will be with me along the way!