There's not much to it actually. It honestly surprises me that every professionally employed person doesn't save. I've worked three jobs in my life. The first for pathetic pay, then I took some time off to go enjoy life after getting told the pathetic pay wouldn't be increased. Something I could do thanks to having saved so well. The next job was a decent increase, and after that I took one for less pay that I wanted more. I got regular better than inflation increases, and like all good investments, they compound!
That took care of the earning side. For the spending side of things I always had a goal to live on half my salary. In the beginning that meant I had to live at home, and then with a room mate, but I did it. It didn't feel like deprivation at all, I've just never thrown money around. I've always bought used cars, and paid cash. I've never had debt for clothing accounts etc, or any other type of consumer debt. Never been too image conscious, so there are very few expensive name brands in my cupboard. I do have a child, but only one. He is the light of my life, but there won't be another. Fortunately for me, my new wife agrees with that! We both prefer spending on experiences rather than things. I'm completely anti-stuff to be honest, but she still likes things. We go on one very cool overseas trip per year. The Seychelles last year where we got engaged, and a few months ago we eloped to Paris for a fantastic wedding/honeymoon. Our families know we're weird enough not to worry about a "normal" wedding, so they were happy for us too. Plus we got to take awesome wedding photos like this:
I won't go into my budget in numbers, but percentahe wise about one third of my budget is for housing expenses, one third goes to looking after my son, and one third is my costs. It feels really comfortable that way and I don't feel like I lack for anything. My budget is probably lower than you imagine, and in my circle of friends it's comfortably the lowest. Still far higher than the majority of South Africa sadly. My friends keep asking when I'll get a new car, but I love my 11 year old Nissan Almera. It's super cheap to run, and still drives like everything is connected, not like a computer runs it. I like that I can feel when the road is rough through the steering wheel, and that when I change the throttle the noise changes straight away. It's also really cheap to insure and I don't feel bad pretending it's a 4x4 in the pilansberg, or loading it with camping gear when the three of us go away. I'm a big bicycle fan too, so I tend to bike the same distance I drive every month. It does help that I built a pretty decent electric bike...
On to investing. Sadly I never got into ETFs and the stock market until a few years ago, but I did own three properties over time. One for myself, and two rentals. They never did well relative to the stock market. Live and learn. Thankfully three years ago a now banned member called Marco got me on the right track. He made outrageous claims, that while potentially dangerous, was true. There were actually investments out there earning 20% plus per year. I crunched numbers, took a safe approach and got into the market. While the days of 20% are over, I know that in the long term I'm sitting pretty. I only do ETFs, I'm not smart enough to pick shares, or maybe I'm too smart!
So how did that all pan out? Well I'd say. I don't own a house anymore, thank god, but I'm currently sitting on about 300+ times my comfortable monthly spend in invested assets. The dividends alone could cover my bare ass budget if I stopped working at the end of the year. I've also got a reasonable pension fund, and if I included that, you could say I've got 400+ times my monthly spend invested, but there's no way I'm going to touch that money, and when I turn 62 it'll start paying me enough money that even in the worst case, I won't have to live in a box on a street corner.
The next question I get from people who understand finance is why am I still working? Well there are a few reasons. I love part of my job. Sadly I loathe a lot of it too, and that part seems to be growing. I'll see if I can hang on for the next 3 years 3 months. If I can, it get's my pension to match my comfortable living expenses, and my dividends should also be around that number. If I can't I'll most likely still be perfectly ok. I might take some fun work for a little while, or I might just begin living my dream life.
Incidently, I dream big. I'd love to bicycle tour ALL of Europe. I also did my skippers license a couple of years back (spending on experiences instead of things again), and I'd love to go explore the oceans at some point. Probably when my boy finishes school so he can come along.
This post turned out longer than I intended when starting, so sorry if it's a slight hijack. I do have a blog about things, including my views on money, spending, life etc if you're interested
http://www.investorchallenge.co.za/blog/ but otherwise If there's anything else you'd like to know just ask-within reason I'm happy to share.
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