How I Stopped Living Paycheck-to-Paycheck and Saved $5000 without a Budget
By: April Holder
Tags: Financial Planning, Saving Money, Financial Inclusion, Savings Account, Finance

Too bad we don’t see this cold hard cash often in our electronic bank accounts

In January 2020, taking an honest look at my finances I knew had to change something. I had just turned 29 and was still living paycheck to paycheck with savings leaving faster than Eliud Kipchoge. I wasn’t happy with my job and I knew that I wanted to change careers by my next birthday.

To change careers, I needed some cold hard cash to be able to take the risk. I thought the most realistic goal was to save $5000 by the end of the year.

Make It Rain Reaction GIF By Thalia De Jong

I didn’t know where to begin, so I read a few financial fitness books to get started. I pulled out a few tips that I saw a lot of success with last year, and I hope you do as well.

First, I became hyper-aware of my spending habits by tracking every purchase for an entire year. This may seem a bit neurotic, but this process actually decreased my stress towards money.

GIF By The Financial Gym

Before tracking, I flipped back and forth between overspending tremendously and spending nothing. The tracking helped me be more balanced, and start using my money to be happier. And, the tracking actually takes much less time than you expect. Plus, the resulting data that you create can be incredibly meaningful and insightful.

The spreadsheet I created saw several iterations throughout 2020, and I’d like to share with you a more refined method, that I hope you continue to iterate in ways that suit you best.

To do what I did, you will need:

To document every purchase you make (10 sec/purchase)

Input your totals into your spreadsheet every paycheck (15–30 minutes/paycheck)

Use the data to make next month’s goals (5 minutes/month)

Document Every Purchase You Make

With some trial and error in my first year, I found the easiest method for me was to download a budget envelope app, I chose “Simple Budget Envelope”. This app isn’t fancy, or even pretty to look at, but it’s simple and does its job. I made envelopes for each category in my budget spreadsheet.

Simple Budget Envelope App

I turned on my credit card’s notification to alert me whenever a purchase was completed. This way, if I couldn’t do it right at the register, I could batch process this task at a more convenient time. Sometimes I would do these all at once at the end of a week if it was a particularly long week.

A few times a month, I would double-check my statements on my debit card, credit cards, and PayPal to ensure that all of my expenses were documented in the Simple Budget Envelope app.

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This process took much longer the first few months, but I was able to figure out what worked for me, and the process became quickly streamlined, as it will for you too!

Input your totals into your spreadsheet every paycheck

When I first started this process as a school teacher, I was paid once a month. So, I inputted my totals monthly. When I started a new job, I started getting paid twice a month. I like balancing my spreadsheet twice a month, since looking at my spreadsheet more often gave me a clearer picture of my finances, and was able to make better spending decisions. Regardless of how you decide to input your totals, here is my method:

The original spreadsheet, with many iterations.

I used a spreadsheet (you can make your own copy of my spreadsheet as a starting point here) and calculated all of my expenses for the month, and subtracted them from my total earnings for the month. For earnings, I included all of my earnings from side hustles, from selling things on FB Marketplace, stimulus check, etc. Then each month I knew exactly how much money I was able to save, with the goal of saving $5000 before I turned 30.

Use the data to make next month’s goals

With all of this data, it’s real easy to see in what categories you spent too much money. Some months I ate out too much, some months I spent more money than I earned that month. This information helped guide me towards spending my money in ways that allowed me to live my best life possible. I ended up spending much more money on traveling (socially-distanced road trips camping and hiking), and far less money on makeup and beauty products. And when I did buy a new standing desk for my home office, or those damn AirPods I’ve been eyeing for years, I knew that I could afford them and they aligned with my goals.

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What I learned from this process

I learned that it doesn’t take a lot of discipline (it does take some) to be in a financially stable position, it takes perspective. I was no longer making wild guesses, or thinking that if I buy another subscription box, that I will just eat out less that month (it won’t happen).

Perspective GIF By Cheezburger

I learned that even during a world pandemic where I quit my job, took a leap to enroll in a bootcamp to change careers, and in this process took a pay cut, I was still able to achieve my goals before I turn 30.

I learned that you don’t need fancy financial apps (that cost money ironically) or to make a lot of money to be able to save.

Anyone can build their savings account, no matter your goal. My takeaway is that you just need to know thyself. By knowing thyself, you know where all of your money is going and you know what goals you have for yourself.

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I’d love to hear your thoughts on this process or the iterations you’ve made, please send me an email at april.holder.ux@gmail.com or comment below.