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Millennial savings tips: 'How I save $10,000 a year on a low income'
Georgia LeakerPublished: August 2 2017 - 12:15AM
I often read about my fellow Millennials saving money by living at home with their parents but for most people I know that's not an option. Sure, we're moving out of home later than previous generations but it's usually for more complex reasons than saving money.
Yet it's possible to save money when you're paying crippling rent prices and trying to lead a normal social life, even on a low income. I know because I do it.
I'm 28, work as a chef, and my salary has never been more than $45,000 a year, plus perhaps an extra $2000 in odd jobs and freelancing.
I save about $10,000 a year. I do this while paying inner city rent (until two months ago that was in Sydney, but I recently moved to Melbourne for a bit of financial relief).
I spend my savings on travel, because I enjoy it and I have no desire to enter the property market (I don't covet 30 years of debt in the form of brick and mortar), but it does lead many of my peers to believe I have a much higher income than I do and am just crying poor when I say I can't afford to do something.
Here's how I do it: I use three bank accounts – spending, savings and rent. My bank lets me set up these sub-accounts within one account. When my income arrives, it lands in spending (a day-to-day transaction account linked to my debit card). The first thing I do is move rent and any upcoming bills into my rent account (my share of the rent is $230 a week). I do not touch this under any circumstances except to pay rent and bills.
What's left is split in two: one half goes into my savings account (which accrues interest and isn't linked to any credit or debit card) and the other I can spend as I please – about $240 per week. I spend about $40 at the supermarket and allow up to $50 for public transport. I save alcohol for Friday or Saturday nights (my hip pocket and waistline appreciate the self control) and I set myself a drinks budget at the beginning of the night. That means if my budget only allows for one drink, I only have one drink.
There are absolutely times I find myself with $5 to my name, three or four days out from pay day. Learning to cook from staple pantry ingredients is a godsend. Lentils, pasta and rice can be jazzed up a million different ways with a few simple ingredients you probably already have in your pantry or freezer. If you can't cook, it's time to learn.
But a tight budget doesn't mean you have to stay at home. I lead a busy social life and I love going out for brunch (I cook all day for a living, it's nice letting someone else do all the work) but I seek out great restaurants with reasonable prices. I get creative when funds are low by proactively suggesting low-cost or free activities, rather than letting my friends try to sway me to spend money I don't have. I also lay-by or AfterPay regularly, as being able to spread a payment of a new dress or shoes over several pay cheques helps keep my budget on track. I also don't have a credit card, sticking to my trusty old debit card.
Of course, this isn't a perfect system and there are weeks that I fail to save more than $50 or so. Recently I needed new kitchen boots and because I have mediocre ankles, I spent $115 on top-of-the-range boots, instead of buying the cheaper $60 pair. I also love musical theatre and will see everything, sometimes twice. I'm not suggesting anyone give up their favourite things, just to not spend money on things you don't really enjoy. The key to my purchasing strategy is simple: I don't think the cost of XYZ is worth more than the big-ticket item I am saving for.
I have a small advantage in that I get free lunch every day (the perks of being a chef), but for those who don't get fed on the company dime, I used to keep a Tupperware container filled with cheese and condiments in the work fridge. I stocked it every week with vegies, cured meat and/or rotisserie chicken and bought a fresh roll every morning. It cost me about $10 a week to maintain. The money I save not buying lunch every day means I can have that $16 avocado toast for Sunday brunch guilt-free. (There is ALWAYS budget for avocado toast, thank you very much).
Oh and I should mention one caveat that is a huge savings advantage: I am allergic to caffeine so I don't spend $4.50 a day on a coffee addiction. That's an easy $1645.50 annually. The little things really do add up!
This story was found at: http://www.theage.com.au/money/saving/millennial-savings-tips-how-i-save-10000-a-year-on-a-low-income-20170731-gxmo21.html