I Set Aside $500 to $1,200 Every Month
By: Auriane Alix
Tags: Money, Self, Wealth, Money Management, Saving

I Set Aside $500 to $1,200 Every Month

And you can do the same by following these 3 simple steps.

Photo by Damir Spanic on Unsplash

Here’s what my usual month looks like: $750 rent for my apartment, fairly good quality food since I like to feed my body properly, drinks and dinners out at least once a week, some clothes and a few books, and $60 to go to the hairdresser twice a month since I like it fresh and neat.

I also have a loan for my car, which is about $120 a month, insurance, and all the other monthly living expenses you probably know about.

I have one regular freelance client, and I write independently, both of which represent between $1,200 and $3,000 a month. Despite this significant difference, I manage to set aside a minimum of $500 a month, a sum that can go much further, up to $1,200 in some months.

Here’s how you can easily achieve the same result

“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.” — T.T. Munger

At the beginning of each month, I make a transfer to my savings account. Once set aside, I avoid using that money. It’s my buffer. However, I sometimes use it in case of an important planned or unforeseen expense, or to finance part of my travels.

You too can easily put aside large amounts of money each month. I’m not a magician. I just learned how to manage my money by developing a financial system that I apply systematically.

It consists of 3 steps. Here they are.

Step 1: 1st to 7th of the month

I end the previous month and start the new one with the money left in my account. Then I receive my paycheck, usually before the 7th of each month.

The variability of the sum can sometimes be stressful. Some months are not so good, as is the case with this one: I’ve received fewer freelance work because of the summer vacation, and my independent writing income happens to be lower than in the previous two months. But anyway, I’m adjusting.

I’m getting rid of my biggest expenses as soon as possible. I have to pay my rent by the 5th of each month. So that I don’t have to think about it, I have set up an automatic transfer on the 1st of the month. So I haven’t received my paycheck yet. This means that I have to “lend” myself the $750 from my savings accounts. Once I get my paycheck, I send the money back to my savings accounts. Rent paid.

Step 2: I adjust my expenses

After the rent, my other monthly expenses are debited. These are constant expenses, so I have to make sure I pay them first. For the rest, i.e. leisure activities, I adapt to the amount I’ve earned. If the month has not been good, I don’t go out as often, or I leave the purchase of a new pair of sneakers for next month.

The goal here is not to get frustrated, but to live within your monthly means. Some people prefer to take into account the lump sum they have in their accounts. I don’t. My goal is to set aside a minimum of $500 a month, so I take into consideration my monthly means and nothing more.

If I make $3,000, I’m having fun. If I’ve only made $1,200, I’m much more reasonable.

Here’s a tip for spending less:

I used to spend a lot of money on clothes and unnecessary things. I’ve learned to regulate that using a simple trick. Every time I feel the desire to buy something, I ask myself the following question: does it add value to my life?

Taken from the Minimalists documentary, this question gives me a more objective perspective on my spending. Does it justify spending this amount of money? If I’m not sure, I don’t buy it. It means that I only buy the things that I have a crush on. That’s my rule. And it’s saved me a lot of money.

Step 3: Money saved

I often check my bank account. Under no circumstances do I want to bury my head in the sand and just pretend until I get a call from my bank. I check my account once every three days, just to make sure that everything is normal and to check what’s left.

I finish one month and start the next with the money I have left over, and intending to put as much money aside as possible.

On the day I get my paycheck, I transfer whatever’s left to my savings account.

This money is now saved and will allow me to buy my next plane tickets or make sure I will be safe if the following month, I don’t get much freelance work or if my stories are less successful.