5 Tips to Save 50% of Your Entry-Level Salary

It’s not as hard as you think.


Ignasius Harvey

3 years ago | 5 min read

Photo by Micheile Henderson on Unsplash.
This post was originally published on Medium.

“It’s not your salary that makes you rich, it’s your spending habits.”― Charles A. Jaffe

I’m 24 and this thought haunts me all the time: how can I survive this financially brutal era? Does it resonate within you?

Studies showed Millenials started saving earlier, but still have less wealth than their parents did at their age. Another fear of mine is buying a house is next to impossible for the 25 to 34. Money doesn’t guarantee happiness but having none won’t make it better either.

Rather than dwell too much on it, my worries led me to take the first step I could do: manage the only active income — the salary.

There’s a common money management rule of 50/30/20, where we use 50% for needs, 30% for wants, and 20% for savings. It’s the sweet spot for most people but we can tweak it as we see fit. For me, it’s the opposite though: 20/30/50. I saved 50% and invest it.

Saving that much may be biased since we all have a different condition. For more clarity, here’s a breakdown of my monthly expenses:

  • Daily needs & wants: food, commute, coffee, hangout, etc. (20%)
  • Paying rent for a flat (15%)
  • Tuition fees for my ongoing postgraduate study (15%)

Maybe I could have saved 65% if I didn’t take the postgraduate program.

However, please don’t assume I don’t have a life — in fact, I spent more time outside than lying down in bed. Hanging out is my hobby. Going home once in a while is a must. I’m not stingy either, my colleagues often borrow money from me.

So, how should you save? Here are some personal quick tips.

Tip 1: Save With the End in Mind

Habit #2 from The 7 Habits of Highly Effective People is, to begin with the end in mind. It’s simple but often overlooked by most people.

Having a clear goal can be the biggest contributor to your saving motivation. Why bother saving when you don’t know why you’re saving? When having an unclear goal, one choice seemed as good as another.

Know where your money will end up to. Set an amount, as big as your dream. Lay out your financial plans. Follow and do whatever necessary to achieve them — as long as it’s honest work.

Reaching a target is impossible unless we define one. And a target means nothing if we don’t attempt towards it.

Tip 2: Fix Your Daily Consumption

Food. Coffee. Rent. Internet. Commute. Subscription. Hangout. What else?

If you noticed earlier, I don’t separate my budget for needs and wants. Daily wants must fit the daily budget. If the wants are big, it should be part of targeted savings instead.

Define all your daily needs and wants. Then, set a fixed number to follow for every single day. The more you cut, the more you save.

Let’s say we fixed on $10 a day. It’s okay though to go over limit sometimes. Life can be surprising, someday spend $8, someday spend $14. The key here is to control the consumption in a sideways manner, like a wave. The average shouldn’t be moved.

It’s okay as long as the average stays the same (or less). Image by Author.
It’s okay as long as the average stays the same (or less). Image by Author.

Another way to keep low spending is, make sure to use every promotion available. However, it has to be aligned with your planned needs. Offers from e-commerce or food delivery apps are abundant nowadays. I’m thorough on this to the point where I became the promo consultant for my peers. You can get more, for less.

Tip 3: Keep a Steady Lifestyle

I came from a far less developed city. If you’re like me, moving into one doesn’t mean it’s necessary to change how you live. Even when you get a salary raise, you’re still you. Lifestyle & consumption don’t need to follow.

Image by Author.
Image by Author.

Back then, receiving monthly salaries make me feel rich. It was tempting to spend a huge amount of it — but don’t. Even when a credit card loan makes it seems a lot cheaper. My simple formula is: if you can’t pay something in cash right now, don’t spend it.

Another reason to hold back on consumption is: more things don’t equal more happiness. I used to online shop all the time, to the point where I’m fed up with it. Even when we do feel happy, it only lasts a few days. This is something I learned after months of actually spending too much.

It’s okay to let loose once in a while, but that’s it. Once in a while is not once daily. Keep control over yourself.

A great way to do this is to find joy in work. When it’s aligned with our passion, feeling fulfilled is easy. Every day becomes a breeze. With the contentment, we’ll never feel the need for an upgraded lifestyle.

Tip 4: Know Your Savings Can Grow

Investing is the easiest way to open up another income stream. It’s a waste to let your money sleep. A lot of investment products are available, waiting to grow your wealth.

You don’t say, but we need money to invest. It’s where the savings come in. We can choose between buying the latest gadget with a 12-month loan of $100 or invest $100 every month for a year on the index fund. The former will lose its value over time while the latter will grow.

Knowing that money can go up in value is another motivation to save even more.

You’re lucky if you’re still young. Time will become your multiplier. If we invested in NASDAQ Composite five years ago, our money would have grown 2.35 times in value, even after the market crash caused by COVID-19 (as of August 21, 2020). The case will be different if we invested in Apple with the same time frame, it’ll be 4.4 times in value.

Investing is a long game. I wonder how much we can gain in the next 5 years.

Tip 5: Repeat

Redo all the steps. Stopping will make the goal harder to finish.

Saving $10 a day looks cute to $3650 a year — yet the final amount is equal. Don’t compromise too. If we lessen our commitment from daily to weekly, the final amount will only be $520/year — that’s 85% less.

The idea of saving is to give up our “now” for our “future”. The question is: how much we are willing to offer. Like investing, more sacrifice means more gain later. The number of our commitments determines the scale. Set your mindset to fit your objectives.

It’ll be easy once you’re in the flow.

It’s Your Turn

The definition of savings here is to free up a portion of an income. In my case, I put most of it into my investment portfolios but you can use it to suit your priorities. Pay debts, support family, or whatever your condition is.

But still, more income streams are a better way to generate more money. While we work toward it, these 5 quick tips helped me optimize what I currently have. To sum it up:

  • Having a goal will be your primary motivation
  • Your daily consumption can be fixed
  • More money doesn’t mean an upgraded lifestyle
  • Don’t put your wealth in a sleeping state
  • Making it your habit will make things easier

Consistency and persistence are the keys. I assure you, it’ll work if you put it to work!

Some points to note:

  • If you’re new to money management, please don’t forget to save for emergency fund. My 55% saving didn’t go to it since I already had a separate account, filled with savings from 7 to 22 years old me.
  • If you’re new to investing, please make sure to learn the fundamentals. High risk, high return. You can gain and you can lose too. Take it slow and diversify. Don’t put your eggs in one basket.
  • My income really comes from an entry-level job, but every city has a different standard of wages and the least possible amount to live by. Be sure to match the formula of your own.


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Ignasius Harvey







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