How I Save an Extra £1000 Each Month
And how I invest it. The principles I follow are simple.
Anyone getting tired of the ‘How I earned $20,000 last month?’ articles?
Yeah, me too. This article is not designed to shock and amaze you. It’s here to help you.
This is simple and actionable advice from an average earner that you can implement to maximise your financial upside. But first, we must start with a reality check.
How much money have you earned in your lifetime? Every single penny. How much is it? £1000? £10,000? £100,000?
Now here’s something you might not like to answer. How much money do you have right now? From the people I’ve asked, that number tends to be less than 1% of the total money they’ve earned.
This is a wake-up call.
If you wish to get a handle on your money, then you need to improve your efficiency by which you capture and retain the money that passes through your hands.
The other scary thing is that money management is extremely simple! Let’s discuss everything you need to know.
Cultivate an open relationship
The amount of people I know that get anxious about opening their banking app is insane. Strong financial positions begin by fleshing everything out — being completely and totally open and honest with yourself about your monetary situation.
By doing this, you will learn your pitfalls, where you need to improve, and what you need to change.
The strange thing is — it doesn’t take a genius to know what’s going wrong; anyone can see where your problem areas are just from a glance over your transactions for the month.
You don’t need to complete any trigonometric calculus — you just need to be honest about your spending/debt.
My problem area? Amazon. Like most, looking at my monthly transactions put me in an awful state of anxiety. And so, like most, I wouldn’t look at it! This is the problem.
I was shocked, appalled, and ashamed when I realised that 90% of my monthly income was spent on Amazon. Just purchasing dumb shit, I didn’t need.
But I needed to feel that. Now I knew what to fix. I could begin to improve my financial situation.
Don’t be naive — you may need to drastically change your living situation
When you compare my lifestyle from one year ago until now — the difference is monumental.
If I could give you only one piece of advice it’s this — live frugally.
Get comfortable with living below your means. Once you know where you spend your money each month, you can decide what is required and what just isn’t.
I got rid of everything non-essentially. I cut my own hair; I quit smoking. I rarely drink. I don’t eat out. I don’t online shop. And you know what? I don’t mind! I prefer having money!
I stopped buying dumb shit, and it’s the best thing I did. I personally feel that if you want more money, then you need to develop your respect and appreciation for money. This begins by not wasting money.
The dreaded budget.
Now, this is an unavoidable step but one that doesn’t have to be so bad!
I have a very basic salary of £19,000, which leaves a take-home monthly pay of £1380. So I made it my goal to get my monthly expenditures below £380. I cut out everything I could to do that. But once I did — I was able to save £1000 every single month.
Best budget advice? Keep it simple. Really simple. The less complicated a budget is, the more likely you are to stick to it; because you know instantly whether or not something is going against your budget.
£1380 income
- £300 — Joint Account (Board and Food)
- £32 — Gym
- £21 — Phone
- £5 — Medium
= £358 in total
A budget does not need to be a difficult thing. Find out your income. Find out your expenditures. Adjust until you are happy.
Remember to go easy on yourself — major lifestyle changes are hard to adjust to immediately. In most cases, you will naturally rebel against your regime even harder than before, digging a deeper hole.
Give yourself time, allow the changes to come in (somewhat) easily.
Investing is non-optional
Here’s a bonus section! You now already know how to maximise your monthly savings. That’s fantastic! It’s a big step into financial freedom! Sadly, it’s not enough long-term.
You need to make that money start working for you. Ensure that you do your own research and find what investment strategy would work best for you.
Please do not make any financial commitments based on my strategy because in the interest of keeping this article concise — this will be a gross over-simplification.
My investments are purely the stock market. I do not day trade. I do not agree with diversification. I believe 100% in buy and hold.
I stick primarily with companies listed on the S&P 500 — over the past 100 years, these stocks collectively have brought an average annual return of 10%.
So, assuming you start your fund at £0 and contribute an additional £1000 every month, you can see what 10% returns do for you.
After 25 years, you could be a millionaire. This is on an extremely basic income.
Look at the ‘Total Interest’ on the right — it’s over 3 times more than the ‘Total Contributions.’ This is why you can’t save yourself from being rich. You must make your money work for you.
This is my investment of choice. Do not follow my advice without conducting your own research. There are a lot more things to understand about investing before making a tailored strategy to fit you.
The principles are simple. Everyone can do it. But you have to actually do it! It’s quite surprising how quickly you can turn around your situation when you start working on your relationship with money.
Follow these steps one by one:
1 — Get real about your situation. Find your pitfalls.
2 — Cut out everything that’s non-essential.
3 — Budget. Budget. Budget.
4 — Invest. Get your money moving!
You don’t need to rush through these steps. Take your time and ace each one! Don’t forget that each of those points needs constant attention.
Money shouldn’t be a source of pain in life. There’s enough as it is! Work through the difficulties, and you can achieve a healthy relationship with money.
This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
