Congrats, after months of applying and interviewing youâve finally landed a job that pays you more than your rent. Unfortunately, it only pays just more than your rent. After groceries, a bus pass and your cell phone bill, it seems that thereâs barely enough left for a weekly pint down at the pub, much less enough left to save.
Yet save some you must, if you ever want to buy a house, buy a car, go on vacation, or make sure youâre covered in case you ever lose your job
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Personal finance expert Rubina Ahmed-Haq says the key is to continue living the student lifestyle for the first few years of earning a salary.
âPeople donât realize how much disposable income, even on a small amount like $30,000, you have,â she says. âBecause as you get older, life actually gets even tighter, with mortgage payments and children.â
Still not convinced? Here are three categories of expenses where you can look to carve out savings:
1. Convenience fees
âAnything that makes your life convenient you need to cut out,â Ahmed-Haq says.
Take a taxi to work because you couldnât bother to wake up 30 minutes earlier? Buy shampoo at the corner store because you didnât want to bus all the way out to the discount store? Sorry, not anymore.
âAll these things are just fees,â she says. "Youâre paying to make things easier for yourself.â
And you canât afford the easy life â not yet.
2. Variable expenses
Pretty much everything besides your rent is a variable expense -- Internet, laundry, groceries, haircuts, alcohol, concerts, etc.,
Yes -- the Internet is technically a variable expense -- you could use it at the library, free.
These expenses tend to be out of control because of the prevalent cultural message of âI always need to be entertained and I always need to have fun,â Ahmed-Haq says.
If only the cultural message was âI need to live in a hovel eating Kraft Dinner until Iâve paid off my debt and built an emergency fund. Only then may I partake in happy hour!â
Alas, itâs not, so letâs work with the times in which we live â try just to cut back a bit.
âNo one is saying donât ever go out for dinner,â she says. Instead, if you know youâre going to dinner on Thursday, plan to eat in on Monday and Wednesday.
3. Impulse spending
Ahmed-Haq estimates that impulse spending can add up to about $4,000 a year. âI think the point is that people donât realize how much they spend,â she says.
To avoid buying jeans because theyâre marked down, just avoid the temptation. Take the long way to your destination instead of cutting through the mall. Donât give yourself the opportunity to spend.
Once youâve cut back in these categories, remember to actually save the savings -- donât save to spend. Aim to sock away 10 per cent of your after tax income in a high-interest savings account. And once itâs in there, Ahmed-Haq recommends a total hands-off strategy: âYou shouldnât use it unless life is really falling apart.â