How To Save Up On A Small Salary in our 20’s

Image Credit: Mark Wagner

A simple fact that is hard to learn is that the time to save money is when you have some.

Joe Moore

Saving up money has been a fundamental problem for most people over the ages and no where is that problem more pronounced than in our 20’s, where we would have just started making some money and the major priority would be not to use our money sensibly, but to have fun any way we see fit.

Now there are some of us who might think that they’ll start saving up once they get married or reach a certain age. Problem is, if you don’t start saving now, then there is a fair chance that you won’t get into the habit of saving later on either. Ultimately, when you are nearing retirement, you might still be staring at working a job instead of taking time off for all the hard work you had put over the years. Even in the event of an emergency situation, a little piggy bank would go a long way for a rainy day. So yeah, saving up in your 20’s is absolutely essential.

I’m not advocating the FIRE methodology of saving nearly all of your assets and living frugally. That’s way too extreme. If you can do that, then more power to you. But for others who want to have some fun and save some money on the side, this article is for you.

Here’s some of the simple ways to save money, even if your salary is tighter than a duck’s arse. (Not sure how or why this comparison came about, but people are using it and the ducks aren’t offended.)

Track Your Expenses

This is personal finance 101. In this age of credit cards, debit cards, e-wallets, online transactions, bitcoin etc etc, it’s easy to lose track of your hard earned money and think “Where the fuck did all money go?” at the end of the month. Trust me, I’ve had situations like that. While there are some people who remember every purchase, major or miscellaneous, most of us mere mortals can’t pull off mental weightlifting like that. That’s where an expense tracker comes into the picture.

You could go old school and keep note of every expense of yours in a notepad or a big diary which might actually see some use in this day and age. But while there are some annoyances, drawbacks and dangers with the march of technology, there are some good points too. This, my friends, is where an expense tracker app can come in handy.

You could opt for expense tracking apps like Mint, Expensify or if you reside in America, you can use apps like Acorns which allow you to invest in ETFs from your savings from their own app itself. These apps connect to your bank accounts and keep track of your expenses and they can create reminders to pay your bills on time. If you don’t want to connect your accounts, they can also keep track of your bills by allowing you to scan the paper bills.

Based on your expenditure pattern, these apps will also give you tips on how to save money. These apps also come with a credit score, which is a pretty neat reminder for you to pay the bills on time, lest you get screwed over by the banks for any future purpose.

Stop Spending for the Superfluous

David Stein of “Money for the Rest of Us” notes that there are three stages of expenditure.

  • The bare necessities, without which a human cannot survive, such as water, food and electricity.
  • The useful, which can make our lives easier and our work more efficient.
  • The superfluous, which serve no purpose other than to satisfy our vanity and to gain the admiration of others.

He also rightly noted that, most of us bust our asses for the superfluous. I’m not saying that you shouldn’t buy stuff that makes you happy. But given a choice between the newest costly gadget and the money to fund your food and pay off your bills for the next 3 weeks, I think the latter should take preference when you are living from paycheck to paycheck. You can put those dreams of buying a new DJI drone on the backburner for now.

There will come a time when you can afford the superfluous without breaking your account. Until that time, purchase wisely and don’t waste your hard earned money.

Alternate Methods of Transport

In some countries where fossil fuels can eat up half of your salary, it might not seem feasible for some people to ride a bike or car for office everyday. While some companies provide a shuttle for transport, not every company has the means to do that. In situations like that, you have to consider alternate means of transport if you want to save money, like say public transport.

Most developing countries have a decent network of public transport vehicles like buses, trains, trams and what have you. Most of them are cheaper than your car or bike trip, they are punctual for the most part, they get you to your desired place and if you get a bus pass or train pass, it’s more cheaper. But of course, public transport comes with it’s own set of caveats especially in regards to safe and secure travel in some countries, especially for women. So, consider all those factors when you are thinking of public transport.

If your home is near your office, then you can walk your ass there. If that doesn’t pan out, then you can cycle to your work. Both are good exercise for the body. If you and your friends do have a car, then you can try out a carpooling system, where you can take turns to use each other’s car for a week and the others can chip in for the gasoline money.

No More Takeouts

While modern technology has made it easier for us to order food from the comfort of our own cushions using apps like Uber Eats, DoorDash and Zomato among others, all these apps have made us much more lazier and reckless with our hard earned money. You think you are making a killing by purchasing food at a discounted price using offers and cashbacks and for the most part, but the trouble begins if your food is wholly dependent on those apps alone. They screw over your cash and your health in a major way, as time goes on.

Ordering takeout isn’t bad. Ordering takeout all the time is definitely bad.

You can opt to cook at your home. It’s way more cheaper than buying food from restaurants, you learn a major life skill that can save your skin in times of distress and impress your near and dear ones and of course, your health doesn’t take a major hit. While there are some people who think cooking is some avant-garde form of art from watching all those MasterChef shows, it’s easy to make a BLT, Fried Rice or an Omelette. You don’t need the skills of Marco Pierre White to make a bloody wrap and a salad.

So, invest in some cooking gear. Again, you don’t need the world’s best cutting knife and board for that. Get some quality stuff. As for the techniques? Well, YouTube can be used for stuff other than viewing cat videos and Logan Paul mishaps. There are channels ranging from basic cooking to the more artful types. Pick your poison.

Credit Cards

Look, credit cards aren’t bad at all. They allow you to purchase stuff if you are on a cash crunch at the end of the month. For people in various countries, it’s one of the few means of international shopping. You accumulate points for purchasing stuff, which can be used to acquire coupons, cashbacks or they can be used to buy more stuff. It’s not the devil’s pitchfork that many claim it is.

Unfortunately, many people have the financial discipline of a chimpanzee on steroids, which explains the black hole that many people fall into regarding credit cards.

You have to keep in mind one major rule when it comes to finance. Never spend more than your means. If you can’t abide by that one rule in your life, then forget about ever applying for a credit card. Unless you are dead sure that you can pay those bills using your salary next month and you are dead sure that those EMIs won’t swallow your life, don’t even apply for a credit card. Those unpaid bills will screw both your life and your credit score. Those EMIs that you applied for every major purchase will ensure that you will never be able to make a meaningful investment in your life.

Forge your discipline first and foremost.

Brand != Quality

Most people will buy something not because it suits their essentials needs or that it fits them perfectly, but because it’s “Brand X or Y, man!!”. Brand Loyalty and stupidity is probably the only reason I can think of for plonking $1500 on an iPhone XS Max or $5000 on a Gucci bag, when there are perfectly good alternatives that offer the same quality at half the price. Sometimes, these companies just ride on their legacy and offer mediocre products and still have the gall to demand a premium for it.

Now, the defenders will say that, “You have to buy it to feel it” or “It’s the brand, stupid!” or some bullshit. Don’t fall for that. Buy something, not because it’s the brand endorsed by the Queen of England, but because it genuinely suits your needs. Unless you are some professional who demands the latest and greatest hardware to run his tasks, most of us can get our products without breaking the bank. You don’t need a 32 core CPU to run a goddamn video game and you sure as hell don’t need a Swiss watch to show off for the evening.

Buy stuff that makes sense to you. There are some local, offbeat brands that offer quality products at a reasonable price and of course, their customer service can tend to be better than the nebulous corporations at times. You’ll have to experiment and find out which brand suits you best.

$%^! Impulse Purchases

We’ve all been there. We bought something for no solid reason. We bought it because it made us feel happy at that moment or we think it will make us feel happy in the future, we bought it because we felt like it. It’s cute to other people and it might make for a story to tell for an evening.

But seriously, $%^! impulse purchases.

Unless you’re an investment banker or the CEO of some major tech corporation, it’s not cute or wise to make an impulse purchase, especially on a small salary. That money you spent on some shoes could come in handy when you’re in an emergency or when you’re out of money at the end of the month and you could use a good lunch after a day’s hard work.

Invest Money or in Yourself

Now, some of you might be asking, “Okay, I’ve saved up some money. What do I do with it?”. The answer is fairly simple.

You invest.

I’m no investment guru and I’m definitely not in a position to recommend any investment tips on stock markets and bonds, since I’m experimenting with those myself. I’ll write a post about that in the future, when I’m confident about my knowledge. Until then, there are many others who are investment gurus. There are countless books and articles on how to make a fortune from investing in the right stocks and social media has brought together many traders and investors who are willing to share their knowledge. Follow them and let your money grow.

This whole article is for people who are running a tight ship with their salary. But for how long will you remain at that salary? Especially when you get married and have kids, you can’t run a ship using the same salary you were earning 10 years ago. In today’s competitive world, you need to skill up and climb up the ladder to earn satisfaction, respect and money. There are several online resources for learning skills such as coding, typewriting, marketing etc. There are several boot-camps that teach you skills and guarantee you a job in some time. Some of them are free and some of them cost some money.

It’s no harm in investing in yourself, if you ever want to make it out of the hole.

That’s all I have for this week. See you guys later.

Until then,
An ever improving geek.

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