Saving With A New Perspective

Saving is important. Without savings, one cannot even invest. Most of my net worth today is thanks to my special saving method. Actually, there’s nothing special about it, but it works for me. Below is a chart of my after-tax income and spending history over the last 3 years. The difference between my income and expenses, as you can imagine, is what I save and invest. The trick is to increase my income faster than my expenses. The bigger the difference the bigger the savings!

Ignoring my part time job for now, I was making about 35 to 40 thousand gross from my main employer in 2009. Due to tough economic times, I managed to live off about 70% of my take home pay and saved the rest for emergencies. 30% of net income may seem like a big savings rate to some, but according to our government, the average Canadian in my age group (20-24) only made $20K per year or less. After reviewing my needs vs wants, I budgeted my spending in 2009 based on a $25K salary. Because if the average young individual like me is able to live off $20K a year, then there’s no reason why I can’t live off $25K. Since I was actually making more though, I just saved the surplus. If I don’t need the extra money right now, it’s probably best to invest it so I can spend it in the future on something important. However since 2009, my expenses have gone a bit.

Career changes, marriage, moving, increased social status, and starting a family are great reasons for lifestyle inflation, but none of those things have happened to me yet. I support lifestyle inflation when it adds value to our lives, but simply making more money shouldn’t be an automatic signal to increase spending. Sometimes we need to step back, and look at the world from a wider perspective to understand the bigger picture. Many “assume” that most people’s cellphones are smart phones today because you see them everywhere. But studies show the adoption rate is only 30% world wide, and maybe closer to 50% in US and Canada. It only seems like everyone has a smart phone because people with old cell phones like me don’t use ours as much in public, (^_^;). When I step back I also realize that my friends are not “average” because they earn and spend more than the typical working class citizen.

If we zoom out further and look at my situation from a global perspective, do I really have the right to complain about being underpaid when I have friends and relatives from over seas working longer hours than me but making just a fraction of my pay? Billions of people make less than $2 a day and have to grow their own food. I’m fortunate to have won the geographical lottery and live in Canada. That was pure luck and had nothing to do with my own decisions. But if I have a home, a car, internet, cellphone, clean water, delicious local eatery, and the freedom to pursue happiness, then I think my lifestyle is already pretty extravagant relative to most people in the world. Even compared to other Canadians, I have a pretty average life, and there’s nothing wrong with being average right?

image from friend’s tumblr blog

And that’s my saving strategy, basically just a reflection of the points below. It’s not a secret, just a simple mind set to follow. There’s no right or wrong to justifying a purchase, but your perspective makes it so.

  • Spending habits should be dictated by one’s values, not income. If people spend too much, they should tweak your values.
  • Don’t give in to lifestyle inflation unless it’s for the right reasons (which will be different for everyone)
  • View situations from different perspectives and only buy things that will add the appropriate value to your life.
  • Look at the bigger picture and understand where your lifestyle fits nationally, and globally


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02/18/2012 9:39 am

After years (10+) of systematic self-denial, the damn has burst and I’ve recently done a bit of lifestyle inflation… albeit a relatively small collection of single-malt scotches. Now that I’ve got a large selection they don’t seem to be disappearing nearly as quickly as if I had only bought one bottle. Perhaps it’s only the nature of having 6x as much available, or I’m getting old and won’t drink more than 1 glass per evening lest I feel like ass the next day. My “savings” program was a forced savings plan for many many years. I just didn’t make enough money to invest or I just didn’t have the resolve to put myself through my own “austerity” plan to keep the bills paid AND to keep me on track financially. Now that I do have a few pennies invested, the monthly income (which I only re-invest at this point) gives me a glimpse of the light at the end of the tunnel. And some comfort knowing that if I didn’t have another single scrap of work, I would be able to keep living the same life I have right now for the next 2 years before the money ran out.… Read more »

02/18/2012 10:12 pm

Aww yeaahhh, I love scotch! (゜∀゜) You have a family who deserves your best so it makes total sense to increase your lifestyle accordingly. I expect my savings plan to change dramatically once I’m in your position too, because I will have others in my life to look after. 2 years as a safety net is really good for most Canadians, and much better than those living paycheck to paycheck.

Simple Rich Living
Simple Rich Living
02/18/2012 9:42 am

Interesting post. It’s very impressive that you are able to save much and live on so little. If you are comfortble, would love to see a detail breakdown of your budget. I began tracking my spendings in 2011. I am hoping to track for a few years to have an in depth look at where I spend my money.

02/18/2012 10:37 pm

I’ve been tracking my expenses for the same reason as you (^_^). That’s a great idea about breaking down my budget. I’ll do a post detailing my spending categories for sure, but I may omit some specific numbers to stay anonymous. Thanks for the suggestion.

02/20/2012 10:07 am

Super impressed with your ability to save especially living in Vancouver! (You live in Vancouver right?)

For me the key is to avoid temptation. I don’t go window shop because that’s like dancing with the devil lol.

02/20/2012 10:24 pm

Yup, Vancouver is expensive but I like the climate here. I don’t window shop either, but I like reading through those flyers they put in my mail box :0)

02/29/2012 6:38 am

Average can be good. Some poepel have to go out and work at several jobs just to put a roof over their family’s head, and put food in their mouths. They are the ones who lives with pressures and stress, which makes me laugh when I hear of some of these celebrities who turn to drugs to help get them through the day.

01/04/2013 9:30 am

Wow I just came across your blog today. Very glad I did.

I am a recent grad living in Vancouver, BC as well. My starting salary is pretty much the same as yours in 2009 and I’m finding it very difficult to save any money. Just rent alone eats up a lot of my paycheque each month. I’m slowly saving for a down payment on a condo but the condo prices here are still so high that it will take me years.

I’m really looking forward to reading through some of your posts on how you manage your money and control spending. 🙂 Thank you so much for sharing your tips and tricks.


01/08/2013 4:18 pm

Wow that’s really inspiring. I can definitely relate to your situation upon graduation, I have a full time job with an entry-level income, as well as a part time job to supplement it. I don’t know very much about investing so hopefully I can pick up some tips and tricks from reading your blog.

Vancouver is a very superficial city. A lot of my friends eat out ALL THE TIME, and wear designer. It’s hard not to get influenced to try that new restaurant, or go out for appies at happy hour, or to barhop a couple of times on the weekend – especially as a 22 year old. How did you deal with that? DId you ever find that your saving had a negative influence on your social life , or that you found it hard to do things that your friends wanted you to?