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How I Saved $200,000 in 3.5 years Without A Degree (Part I: Earn + Save)

Last month I wrote a post about this but it wasn't saved before it was published so I had to rewrite the post. During the past month, both the equity and crypto market have been volatile and that affected my net worth but as of now, I'm still safely above $200k :)

Despite still in my 20s, I'm already well known for being a long-winded naggy person who is bad at summaries and extremely good at complicating simple things (it's a skill), and that is further proven when I finished writing this post with close to 36 points (gasps!)

I have been contemplating on cutting out some points, but it's hard because it's really all those little things that add up and help me reach my milestones.

So instead, to save the readers' attention span and prevent this tab from getting closed out of boredom, I have broken this long post into 3 parts: Earn & Save, Live &Spend, Maintain, Invest & Others  

Without further ado, allow me to share how I achieved my 200k milestone

Earn - Make More Money

1. Make the hay while the sun shines, strike while the iron is hot

Stating the obvious here but before you dream of any sort of huge savings or passive income rolling in you will need capital and in order to raise the capital you will have to earn money.

The power of compounding means that it's better to get your hands on the money earlier so that it will have a longer time frame to compound and grow exponentially, which is why I chose to start working as soon as possible and make money as much as possible so that I can save up the money I need to invest.

There is only so much time we can pursue a corporate career. You can start a business or go to university even after 60 years old, but it's less likely to get a decent job at that age.

2. Delay my studies to start working

In two of my earliest posts here and here, I have stated 18 reasons why it may be a better idea to delay, or even skip your degree and dive straight into the workforce.

By delaying my further studies, I managed to save money by first, not getting into debt and therefore I don't have to pay interest, second, accumulate capital for investment at an earlier stage and took advantage of opportunities when prices are low, and third, gain professional working experience which thus enhances my human capital and allows me to learn from a lot of mistakes at a younger age.

I'm also optimistic about fetching a similar salary to that of a fresh graduate by the time I have completed 4 years of work. Even if things go down the hill and I end up losing my job in this crisis, it should still be easier for me to find a job than a fresh graduate because of my working experience.

3. Learn to dance under the moonlight

Moonlighting - have a second job, typically secretly and at night, in addition to one's regular employment

I used to moonlight in the evening when I first started working, but it didn't take long for me to realise that it's not feasible for my job (both previous and now) because most of the time the moon is already sky-high when I leave the office. 

I then switched to picking up work that can be completed over the weekends, and therefore effectively working seven days a week for the first two years. On a good month, my moonlighting income was sufficient to cover my expenses, which was relatively low as compared to my peers, as such I could save 100 % of my full-time take-home pay.

I have since cut down a lot on my moonlight work after I reached my first 100k and got a pay raise, because I figured that while financial independence is important to me, I may not mind delaying it by a few years to have a more relax schedule and enjoy life a little more.

4. Get the highest paying job I can find 

I had clear financial goals to save up money for my education and investment capital asap, so I took up the highest job offered.

Indeed, a commissioned job may remove the ceiling of your income and if you work smart enough and get the right connections you may be due for promotion with a huge pay raise. However, you may also not close a deal to get the commission or get promoted for your dedication at work, but you will still get your basic pay.

I think this depends very much on personality and needs and I'm an awkward introvert who needed a lot of stability, so a high basic pay was what I was after.

Career prospects, location, company culture, and everything else are secondary.

5. Consider the career prospect

Just because it is secondary doesn't mean that it is not important. After you have settled in the company, it is important to figure if you really want to stay for the long term.

A good gauge is to observe your colleagues or management who are at least 10 years your senior because you are likely to be doing their work in a decades' time. If you don't like what they are doing you will probably not enjoy your work in the future.

Another gauge is whether if you are satisfied with the increment after working for a year. Unless it is a huge crisis like now, your increment and bonus are generally based on your work performance. But just because you don't get good recognition doesn't mean you are not good, there are still factors like job fit, culture, and budgets.


6. Know when to leave a toxic environment 

Anything that is toxic is bad. Stay away from it. You can save a lot of time, effort, and emotions by being in the right environment that is suitable for your growth.

Work towards your strength and choose the most fertile soil for yourself. Not everyone performs well in the same culture, just as not all seeds can germinate in the same soil or climate.

Leaving a toxic environment has allowed me to gain better opportunities in my career and life. 

Save

7. Make savings mandatory

In case you still don't realise, it never works to save up whatever remains at the end of the month, because you will end up spending what you have saved the next month, thinking that you still have some money left to indulge in little luxuries.

There are many ways to go about it, the easiest way to start is to automate your savings.

If you are in your twenties and don't have any dependents, aim to have a high saving rate. I always try to save at least 50% of my monthly income.

8. Save 100% of the windfall of any sort

Extra money is just extra. This includes bonuses.

I put them into my savings account and never touch them.

I also don't have the misconception that I need to reward myself after a year-long of hard work because I have a clear idea of what I'm working for, and by working hard, you sharpen your professional skills which is a form of human capital appreciation, and that itself is already rewarding.

9. Give myself allowance

When personal finance articles advise you to "Pay yourself first", they usually mean to save up a fixed portion of your income and then spend the rest. 

I do it the other way round whereby I give myself a fixed allowance and save the rest. 

I find this very effective to discourage me from lifestyle inflation as my income increases.

10. Make use of the CPF systems

There are many ways we can save money by making use of the system, but so far I have been doing two things: 

1) Transferring the money from Ordinary Account (OA) to Special Account (SA) to enjoy the 5% interest rate on my first 60k and 4% thereafter and, 

2) Top up $7,000 into SA every year to get tax relief and enjoy the interest rate as well. 

I see CPF as part of my savings and 4~5% is definitely much higher than that of in OA and a fixed deposit account, which is why I'm using it to appreciate my savings.


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