Saving for a Comfortable Lifestyle

Thursday, February 20, 2014

The last few years, my partner and I have taken extravagant holidays. In 2011 we went to India and Nepal in September, Hong Kong over Easter, and a few interstate vacations including an amazing rainforest resort on the Gold Coast; in 2012 we went to Spain, Italy and France for 5 weeks, and in 2013 we went to Chile, Peru, and North America for 6 weeks.

A few months ago we bought a house 3km from Brisbane CBD, and we’re still planning to spend a few weeks in Samoa in June.

Now it sounds like we must be rolling in the dough, right? Believe me, we’re just comfortable.

It’s surprising how by cutting back on expenses and putting away a good chunk of your salary each payday can really help you afford to do the things that you’re passionate about. Travel may not be everyone’s goal – it may be saving to send your kids to a private school, or buying that family or holiday house, or upgrading your technology every few years.

A few years ago I ate cheese on toast for 80% of my meals to save up for a holiday to Greece. Around the same time, I started writing down how much I spent every day. What an eye-opener! $3.50 for coffee, $6 for lunch, $15 for the movies with popcorn, $25 for that necklace that I just ‘had to have’… it all adds up. Some items are necessities, and some are not. Keeping track of all your expenses will help you see where your money is going, and whether you can cut back without sacrificing your happiness.

The way I visualised it, was that $25 on a necklace would also have bought me lunch and dinner in the Plaka district in Greece. By positioning my expenditure in perspective of future goals, I was able to prioritise my expenditure.

And as a visual learner, working purely in cash was helpful for those times when saying no was just too difficult. I would withdraw a set amount every week from the ATM, and that was all I had for food and entertainment. If I spent too much one day, I would definitely know it by looking at the empty space in my wallet.

I also started to automatically divert 30% of my salary to a ‘luxury savings fund’. The other 30% went to housing and the remaining amount on food and entertainment. My luxury fund was a savings account that was difficult to withdraw money from, and it meant that I constantly thought I was poor, while I was building up a nice little pool of money to draw from to spend on the things that really mattered to me.