After college, I started my first career-related job in hotel management with a salary that wasn’t much more than minimum wage. And while I managed to grow that income over the years, it never reached what you might consider “great money” levels.
Even then, I was able to save over $100,000 by the time I was 25, most of which was consumed in the housing market collapse, but that’s neither here nor there. The point is that I was able to do it, and do it on an income that was nothing special.
Cutting out the excess and living life my way
It can be hard not to do a little splurging right after college when you finally have a steady paycheck coming in and few obligations to others. However, I didn’t let the temptation of new things stand in my way of saving. Of course I picked up a few things to furnish my new apartment and bought some new cloths for work; but otherwise, I kept extra costs to a minimum.
This meant that I didn’t buy a new car or a bigger apartment than I needed, waited to get married and have kids, rarely took vacations or had fancy dinners out, and I set savings goals for myself.
Sure, this period of time certainly had its rough patches, but this can happen in many of the lives of hard-working individuals at this age. And my goals for eventual financial freedom allowed me to look ahead at what could be, which helped me forge ahead when the going got tough.
Expense sharing with a partner
Another major element in my success as a saver in my 20s was the ability to expense share with a partner. While some people take on a roommate to do this, I shared costs with my future wife-to-be. We met in college and moved in together after graduating, which allowed us to share expenses when it came to things like food, rent, utilities, entertainment, and more. Being able to in effect cut such expenses in half, meant that even with a low income during those initial working years after college, I was able to save and invest, growing savings during a period when time was still on my side.
Out of sight, out of mind
During this period in my life, I was often so busy with work that I didn’t have much time for spending money anyway. Therefore, I put the majority of my paychecks into a savings account, a 401(k) plan, company stock-purchase plan, certificates of deposit or savings bonds in which the money was out of sight, out of mind, and somewhat out of reach of my spending.
Making the money more difficult to get to and potentially subject to penalties if I withdrew it acted as stopgaps to keep my money safe and out of temptation’s grasp. This also helped me spread out and diversify my savings among investments that varied in type, risk, and return levels.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.