The year after I graduated from my undergraduate program was one of the most financially challenging years of my life. Armed with a bachelor of business administration and cautious optimism, I took a step into the “real world” and began my first full-time job as a technology salesperson. With this new role came a swift introduction to personal finance and saving, paying bills and prioritizing.
I started the year with less than $2,000 CAD (less than $1,500 USD) in my bank account after paying first and last month’s rent on a new apartment, and finished it with $25,000 CAD (~$18,600 USD) in savings. I was fortunate enough not to have any debt to repay upon graduation, so I was able to fully focus on my savings goals. My goal was to gain entry into a post-grad program at some point in my mid-twenties, but the cost of tuition loomed over me. I knew that if I wanted to achieve my savings goals, I would have to employ some serious savings strategies. So, how was I able to do it? Reflecting on my experience, I can boil my strategy down to the following:
1. I budgeted around my base salary — and only my base salary
Since I was in a sales role, I was compensated in two ways: a base salary, and commission and bonus payments. Unsure of how successful I would be in the role, I took the much more conservative approach of budgeting my lifestyle around what I knew I would get paid, not what I hoped to get paid. I built savings targets into my base salary and pledged to put anything extra I earned towards my savings goals. Essentially, I pretended that my other method of compensation didn’t exist. Until of course, I cashed the check and placed it into my savings account.
2. I paid a flat rate for living costs — and opted for student housing
My first job out of university was located in a student town, meaning there was plenty of student housing to choose from. Student housing doesn’t always mean cheap, but it can mean cheaper than other options. I rented an apartment in a student building (with a roommate) that only required one flat monthly payment that covered rent, utilities, and internet. It was $775 CAD ($577 USD) per month. This made paying bills simpler and allowed me to keep track of what was leaving my bank account more easily. It wasn’t the most glamorous place to live, but it was functional, clean and safe — so it worked.
3. I turned a work benefit into my main hobby
Many employers build some sort of fitness perk into their compensation package. Whether it’s a fitness subsidy, class passes or a corporate gym membership, there can be a lot of opportunities to save on moving your body. In my case, I signed up for my employer’s corporate gym membership and went almost every day. Not only did this help with stress management, but it also gave me a goal to work towards outside of work and sparked my interest in weightlifting. It also kept me quite busy. So instead of grabbing drinks or dinner after work, or spending money on expensive fitness classes, my less-than-$30-per-month membership kept me busy, fit, and focused.
4. I cycled to get around
When preparing to start my new job, I looked into how much a city bus pass would be — and just balked. I lived about a 25-minute walk from where I worked, but in a mid-sized city, getting around solely by foot wasn’t the most practical. So instead of shelling out money for a city bus pass, I brought out the bike I used as a teenager and turned it into my main form of transportation. I was able to get to work in less than 10 minutes, without paying $150+ a month to do so.
5. I budgeted in little rewards to keep myself motivated
Saving aggressively can be a grind. It can mean saying no a lot, to friends, family, and yourself. In my search for a little more balance, I budgeted a biweekly manicure to keep myself motivated, not defeated, by my goals. The $35 I spent every two weeks was more than worth it to keep me feeling focused, happy, and put-together. For some, it might be a dinner out every so often, or a new pair of shoes, but my biweekly ritual was what worked for me.
6. I vowed to save 100% of my bonus compensation — and then actually did it
When you go from having a more modest salary to suddenly having a much larger cash flow, it can be tempting to go out and buy everything you had been pining for while you were saving. Following through on saving can be difficult in the moment, so I focussed instead on what I was getting, not what I was denying myself. Every dollar deposited into my savings account was another dollar towards my savings goal. Placing the emphasis on achieving that goal helped me ignore the newest bag or makeup product beckoning to me from my inbox.
7. I challenged myself to “no-spend” weeks
Every so often, I would try to spend $0 on things that weren’t necessities (necessities being rent, food, and my cell phone bill). Each day I successfully spent $0, I crossed off on my calendar. Once I got to a week, I bought myself something small — like the latte I said no to on Monday, or the takeout I was tempted to order on Wednesday. This forced me to consciously consider my spending habits, and really think about the value I assigned to things I used to mindlessly spend on. I would often reflect on what urged me to buy something in the moment (usually out of boredom) and what caving to my every whim would have added up to at the end of the week. Impulse buys — even small ones — add up, and this practice helped not only with my savings goals, but with my long-term perspectives on money and value.
8. I cut my bad habits
Gone were the days of impulsive takeout, of buying alcohol, and of mindlessly online shopping. I focussed more on cooking, tea, reading, and working out — all things that were better for my wallet and my health. I re-framed these vices in my mind, and found they all had one thing in common: they didn’t make me feel good beyond a brief moment. There’s nothing wrong with grabbing takeout, having wine at the end of a long day, or buying something you’ve been eyeing. But my focus on budgeting forced me to reflect on the return on investment each of these things brought me. Why would I spend $15 on greasy takeout just to feel sick afterward? Why would I forego the interest a $200 investment could make just to buy a shirt that would be out-of-season in a few months? Sometimes, the return on investment is worth it — but I learned quickly that most of the time, it just isn’t.
9. Bonus — I saved half my tax return
The $25,000 CAD I managed to save in that one year quickly turned to $29,000 CAD ($21,600 USD) when I saved half of my tax return the following year. At that time in my life, I had returned to school and saving 100% of it (as I had done with my bonuses in the past) just wasn’t feasible. But, I did still want to aggressively save, and since my tax return reflected the compensation I had earned the year before, I thought saving half was an opportunity to round off my year of saving.
Everyone approaches saving differently, and with different goals in mind. These are just some methods I employed as a new graduate to reach my savings goals. My year of saving provided some valuable lessons, which I intend to carry forward as I finish my post-grad degree and re-enter the working world.
Image via Unsplash
Source: Emily Kroboth [https://thefinancialdiet.com/]