2016 was a life-changing year for me. I graduated school with an MBA, landed a job at a top accounting firm, and started to care about my financial situation. When I first arrived in the US as a freshman in college my mindset was on partying and enjoying life.
As I progressed through college my mindset started to shift as I grew tired of having less than $100 to my name. During the summer between my senior year and MBA, I got an internship. Going into the internship I wanted to save 30% of the income I received to invest.
Having successfully achieved that goal, it gave me great pride seeing my net worth near the five figures instead of the three figures. As I become more entwined in personal finance, I made the ambitious goal at the start of 2017 to save a whopping 55% of my salary, after taxes. Far above the recommended 10% by most financial advisors.
Once I put the habits in place, my finances started to run on autopilot.
The best part is that I do not feel like I am missing out on anything in life. I still go out, I still eat out and I still take vacations throughout the year.
Here are five strategies I use to save over 50% of my salary and still live life like a 20 something.
Live with a roommate
I do not have the luxury of living with my parents as an international. Housing is often the biggest cost in most people’s budgets. While I can certainly afford to live in the more glamorous places some of my friends live in, I am quite content living big in a tiny place. Having another person to split rent, utilities and food with is a huge saver.
Total savings – I estimate that having a roommate and living in a smaller place saves me roughly 13% of my salary a year compared to living on my own. To put a dollar amount to this, a roommate saves me over $6,000 a year!
Live within walking distance to work
Not having a car is one of the *best* decisions I have ever made. Not only are they lousy investments as they depreciate in value, they are simply just a pain to maintain.
Today, the cost of car ownership is an estimated $8,698 a year. If you add in the cost of parking in the city and gas it is likely far greater. I think I will stick to walking to work for now.
Total savings – This decision saves another 16% of my salary. In dollar value, we can say $8,698 for simplicity.
Attend free events
One of the perks of living in a city is that there is always action. Whether it be concerts, the NFL draft, or free museum entry on Sunday, there is always something going on. Take advantage of these events rather than spending an expensive night out at the bar or casino.
Total savings – Hard to estimate but I would say roughly 2% of my income.
Cook far more than normal
I have to admit this is one I sometimes struggle with. Cooking your own food is not only healthier, it is a major budget saver. Just last week I cooked a salmon dish that lasted me six meals. Total cost was $30 or $5 a meal. Compare that to buying these meals and it is easily $15 a pop.
Total savings – 10% of my salary. In dollar value cooking alone saves me over $5,000 a year. City food can be very expensive!
I cannot begin to tell you how much your attitude towards your finances matter. If you think you have to retire at 65 or later then you are setting yourself up for that life. I used to read endless amounts of financial advice but never acted. Once I started working I set a to do list and stuck to it. Some of these items included a minimum of 20% into my 401k, max out the HSA, as well as my Roth IRA contributions.
Total savings – Honestly this is priceless but based on my investing habits I can safely say this has helped me save 20% of my salary just by my 401k.
Overall, the most important point in this entire article is number 5. Having the right attitude will dictate your financial life. At the age of only 23, it is painful to think that I have already saved more than the average American. Take control of your finances, your wallet will thank you later.