This article was written in 2014.
Two weeks ago, my major work project was given an end date. Now, I am without a regular income until the next project comes around.
It’s times like this that I’m so grateful for our savings buffer.
I’m constantly amazed by the people who ask us how we live the way we do, in complete disbelief that it is possible.
They usually have car payments and a lot of other consumer debt, but they also earn income from a job.
They’ve never considered using that income to direct their lives onto a different path.
Here is a list of all the ways we save up the money we need to travel. We’re not rich, but we work hard and try to do the right thing with our money – always.
1. If you are a couple ‘Live’ on one income
If you are a couple, you have a unique advantage – the possibility of having two incomes.
We were child-free when we started saving, so we had two full-time incomes.
In the beginning, we saved the smaller pay cheque (mine) and ‘lived’ on the larger one (my husband’s), but we eventually got to the stage where we were saving my pay each week and 30% of his- saving is addictive like that.
It took sacrifice and a lot of cost-cutting, but when we look at the freedom we have now, we know it was worthwhile.
When I say ‘Living’ on one income, that means saving the other. Completely.
Whether you ‘save’ by paying down debt or building a savings account is up to you.
When we had consumer debt, such as credit cards and personal loans, we used the second income to pay those off.
We knew that credit card interest was anathema to long-term travel.
Once our consumer debt was paid off, we channelled those funds into a high-interest savings account.
The funds began to grow.
After two years, we had paid down debt of over $20,000 and saved nearly $80,000.
Living on one income also helped us adjust to maternity leave as we never saw the second income, so we never felt our lifestyle changed hugely when our first child was born.
I did miss seeing the savings account balance grow, though.
It’s how we will always live now, whether travelling or at home.
2. Cut your expenses
Everyone knows that cost-cutting is one of the most important things you can do when saving for anything.
I’ve always been frugal with grocery shopping and utilities, but our biggest cost-saving was living in a shared apartment.
We shared a big two-bedroom apartment with a good friend for four years.
The weekly rent was $400, of which we paid $215 as we had the bigger room.
This alone saved us over $38,000 compared to renting the apartment as a couple.
The weekly rent was less than 10% of our total income, which gave us a huge head-start on our wealth-building mission.
Now we have a child, house-sharing isn’t an option, but I urge anyone without kids to seriously consider it a way to cut costs.
When we purchased our first home, we ensured we could afford the mortgage payment with one income.
That meant we had to buy an older home in a grittier area that needed cosmetic work.
It wasn’t (and still isn’t) pretty, but I doubt we will ever experience mortgage stress.
3. Increase your income
Be open to different ways of making money. Even when I was in a well-paid, full-time corporate job, I still took part in focus groups and online surveys for extra cash.
I worked behind the bar at events and part-time in a music store on weekends.
My partner accepted any overtime work that came his way.
Yeah, we paid a lot of tax, but we got most of it back when end-of-year tax returns were submitted, and we earned and were able to save a hell of a lot of money when all our incomes were combined.
As we got older and began to invest in property, we drew more income streams from them; however, in the beginning, all our savings were from jobs – lots of them!
These days, there are many ways to earn extra cash online.
4. Get every extra dollar you can
I’m talking tax returns, bank fee refunds, cash-back offers on purchases, and cash-back credit cards.
There are so many ways to earn more money without doing too much work.
Tax returns have always been big earners for us, so we try to submit them as soon as possible to get our funds earning interest right away!
When Dylan was born, we were granted a Baby Bonus from the Australian government, which we used to open a savings account for him.
5. Budget – to an extent
To create our budget, we worked out how much we actually needed to live on for a year, including rent/mortgage, insurance, utilities, groceries, transport, pocket money (for fun stuff), and clothing.
Then, we set up an automatic transfer from our savings account to our bills account for the monthly portion on the first of each month.
Our pay cheques are then deposited directly into our savings account.
We never have to ‘survive until payday’ as we pay for the month in advance.
I truly believe that once you start saving, everything else will fall into place. You will become more conscious of every dollar and where it is going.
The habits we formed while saving for travel have allowed us to become financially sound at a very young age while enjoying the world and all it has to offer.
What are your top savings tips?
