5 tricks that helped us save 100% of our income as a married couple working full time and living in Cambridge
When I first moved in with my husband in Cambridge at the age of 25, I made one of the boldest but perhaps most rewarding decision to buy a two-bedroom house in Cambridge. It was a shared ownership scheme which allows us to buy 25% of the house value and rent the remaining 75% from the housing association. Due to an admin fault in my husband’s credit several years ago, we realised we wouldn’t be able to secure a mortgage in time for this deal. With a little bit of help from our family, we used all our savings to pay the entire 25% of the value of the house in full.
This has given us two gifts: 1) a secure roof above our head so long as we pay the rent to the housing association on time (the rent is way less than what we previously pay for a master bedroom in a shared house in the same neighborhood) 2) the obligation to pay back our relatives and replenish our savings has taught us to review our spending habit over and over again. This gives us an opportunity to be honest with ourselves and optimise our spending.
Below are two diagrams that show my husband’s spending before marriage and our combined spending after marriage:
Through this process we learned:
1. Live On Less Than We Make, Live On Our Side Incomes
It’s so tempting to spend all of our salaries, and this is exactly how we manage money in our pre-marital life. But after we started to be “forced” to be conscious with money, we started to open our heart to ideals such as “FIRE (Financial Independence Retire Early”) and Dave Ramsey’s baby steps. They both boast the idea to live on less than you make, in our example, to live on one salary when our household has two full-time income, or better yet, live on purely on side incomes and save two full-time salaries, which is almost our situation now.
2. Budgeting is Key
Despite being mindful, it’s still so easy to spend more than we think we would. This is because at the beginning of this journey we are not using a budget. We do not know how much groceries really cost or how much some household or medical emergencies really adds up. We started making a budget by getting together our three-month worth of bank statement and categories all the spendings and then make a planning budget and optimize from there.
3. Luxury Is Relative
Our concept of luxury is often very much influenced by our culture, friends and social media. For my parents in China it’s infinite big brand clothes, for our friends here in the west it might be some exotic travel and expensive theatre. For us, it might neither of those things. Over time we have learned that we are happiest staying at home cuddling, talking, watching the movie we both love, parallel playing or cooking a new recipe together. And those are all free! Knowing that we don’t really need nor get joy from expensive items or experiences that are often defined as “treat-your-self” purchase, we freed ourselves from those expenditures.
4. Best Things In Life Are Free
Although there is no entertainment budget in the diagram, we manage to fill our life with all kinds of small surprises that are free. After signing up to some high-quality loyalty programs, we are able to get free doughnuts, meals, coffee and cake, freshly-made juice, cinema, and even luxury hotel experiences. Watch out for my blog posts about how to get freebies that are worth over a £100 a year.
5. Honesty Is The Best Policy
This is perhaps the most important tick of all: be open and honest about this plan in front of our friends and relatives. It’s very discouraging when you have to attend some obligatory friends and family gathering and look at the money you have saved disappear into those events. Truth is our friends and family want to see us but there are definitely cheaper ways to do it. Communicating early with them and suggest alternative plans that might work out cheaper can really help.
