Ever since I got my first job out of college in May 2017, I was ecstactic. I started working at a startup in Chicago, and really enjoyed it. It was great to do what I love (code), and get paid to do it. Along with that, I was learning a lot more in the real world, than from university. It was an extremely satisfying feeling to see money drop into my bank account on a regular basis. In my early days, I thought of my bank account like a high score, every month I wanted to see it going up; this is after including expenses. Essentially, my goal was to ensure my cash flow was constantly growing.
Mark Cuban is one of my role models, and I love this one quote of his; Live like a student while you can. I truly believe in his way of thinking here; right out of college, we have the physical and mental capabalities to continue living like students, while we earn paychecks, so why not still do it? There will come a time in the future where we will have bigger expenses, but for now, live like a student.
A little bit about my personality. I personally hate shopping, I just buy what I need. I rarely buy fancy things. I made commitment to not sign up for every new subscription service that came out, those things add up over time and can turn real ugly. The only one I signed up for is Spotify because I heavily use it.
Right out of college, my major expenses were just rent, food and outings. Outings included going out for dinner and drinks now and then. Ofcourse, initally I did overspend on my outings, but then slowly I started to focus on things that mattered. Is it really worth it to spend on multiple $25 cocktails every weekend? I tried to be more mindful on what I was spending on, and in my head, made sure it was 'worth' it.
After my first year of working, I built up a decent savings of $30k. Soon after, I found another great opportunity with medium sized, startupy company in New York. I knew moving to New York would definitely increase my expenses, so I made sure to negotiate a proper salary for myself. In a city like NYC, where we are surrounded by advertising, marketing and all sorts of cool products, services and experiences, its hard not to make a dent in your wallet. It was at this point when I saw a clear distinction between things you WANT and things you NEED.
Believe it or not, I lived a lot more thrifty in New York. Part of this is because my rent and taxes were higher, or maybe I was just getting slightly older. I actually limited some of my outings because going out in New York is thoroughly more expensive that Chicago. I preferred to hang out at friend's apartments, ordering food in, playing drinking games, board games etc. And boy did I enjoy it. One of the things I ensured throughout my time was that my monthly savings was either the same or increasing.
One of the things I always do is maintain an excel sheet, where I document all my expenses. There are many apps that do this for you, but I have been doing this since my freshman year 2013, and I prefer typing out each expense as I feel it has a stronger effect mentally. There are ofcourse times where I would splurge now and then, but documenting it makes me more mindful of the future. Because I maintain these excel sheets, I am able to track my savings each month, and a part of me wanted to increase my savings as much as I could. There was a period of time where I had the urge to completely minimize my expenses. Kind of similar to this post on 'Treating yourself as a business' .
How can I forget the one thing that I constantly spend my energy on; Investing in the stock market. As soon as I started building up my savings, it became pretty obvious that the savings is NOT the way to build wealth. Investing is one of the ways. I made sure that I was regularly putting money into the stock market, and spending time understanding how to effectively invest. I have spent a good chunk of my free time reading tutorials, books, explanations of random finance terms, and also took a couple of CFA Coursera courses during Spring 2018.
Up to this date, I have invested a decent amount of money and realized quite a big return on it. Check out my post on my 200% return in 3 years and my strategy behind it. This definitely helped me reach my $100k net worth goal when I was 24.
As I progressed through my career, I always set reasonable milestones for myself. First, build up my net worth equivalent to my yearly salary, which was initally in the $70-80k range. Then build it up to 100K; Then, my salary did increase over 100k when I moved to New York, so making my net worth equivalent to my new salary was the goal. And now, its to focus more on investing, because I think that is the true way to build wealth. I also try to focus on my side hustles, this being one of them.
I hope this post helps you change the way you think for the better, happy saving! :)