When we decided to pursue this idea of moving abroad, I immediately thought of money and how I’d be able to afford it. Money was both my biggest worry and biggest motivator over the next few months.
It’s also the thing that I get asked about most as an expat. So, I thought I would share with you the route I took to saving $23,400 in 14 months.
To begin with, I did as much research as possible into the cost of living, consumables, etc. and tried to prepare for possible bad financial situations (including not being able to work, which I’m now facing). I wanted to have the best year ever (and not have it cut short by going broke), so I was trying to prepare for any and all situations.
My solution to most was to have as much money saved away as possible, and that’s what I tried to do. For 14 months I scrimped, saved and stored my money away. Although I (secretly) had big goals, I tried to be realistic. I set myself a modest, but attainable savings goal and got to work.
Short-term Savings Account
The first thing I did after we discussed the possibility of a gap year abroad, was open a savings account that I called my Short-term Savings (STS) account. Into this account I would deposit every single penny I saved. The account offered very low interest, but it was something; and it was separate from my chequing and TFSA accounts. Keeping it separate from my other accounts was huge for me as I was able to see exactly how much I had saved for this specific goal. I didn’t have to work out how much was left after bills, nor did I have to worry about the what ifs because I had another separate account for that.
I am a huge proponent of automatic transfers – they make saving money, contributing to retirement, etc., easy and almost forgettable. So, one of the first things I did was evaluate just how much I could contribute to my STS account, without sacrificing contributions to my retirement and TFSA accounts. Although I wanted to save as much as possible, I didn’t want to neglect the other accounts and piss off future-Kate. I set up the transfers for each Friday and that was that. With the click of a button, I was saving money at the end of each week.
Occasionally, throughout the year, I would reevaluate just how much I could put into each account and would up the amounts when I felt it was a good idea to do so. Eventually, I was able to transfer $100CAD each Friday into my STS; it was aggressive at first, but watching the account grow week after week made it all worth it.
The day after Dave and I talked about pursuing the idea of moving abroad, I started looking for a part-time job. I wanted to find a job that was close to our house, had flexible work hours that would compliment my day job, and I wanted something that was completely different than what I did all day long. Given that this was a second job, I wasn’t too flexible with my criteria, and thankfully I found a place that fit my list. A spa just five minutes from our house was looking for a receptionist and I fit the bill. I started working 20 hours a week; two days a week I would go straight from my day job to the spa and then I’d spend all weekend there. For nearly three straight months I went without a day off. It was tiring, and looking back I’m not sure how I did it without going crazy, but it was worth it as I knew every penny I made would be just one more minute, hour, week that I could live and travel in Europe.
I kept the part-time job for six months. At that point, it was no long compatible with my day job and I’d found other ways to up my savings, plus I missed having a life and a day where I woke up without the alarm clock. Had I kept the job for the entire 14 months I would have had at least $30,000 saved up. Yes, it would have been amazing, but I would have been exhausted and miserable – and an extra $5,000 just isn’t worth it.
I was working as a conference marketer when we started this journey and as the conference approached I was required to work more and more overtime hours. Thankfully, as I was a contract employee, each of those hours was paid out – and not in lieu time. The week of the conference was insane; I worked a total of 40 overtime hours, from which every penny was put into my savings account.
In the months following the conference, although my workload was significantly less, I never shied away from working overtime (but not taking advantage of it) because I knew it was getting me one step closer to my goal.
Got a Promotion
I was very lucky that a few weeks before my contract was set to end, a colleague went on mat-leave and I was able to apply for and win the position. This new role not only extended my contract with the employer but also came with a lovely pay raise. Thanks to this bump in income, I was able to designate more funds towards my savings and retirement accounts.
A former colleague hired me to help design and layout a quarterly newsletter that she produced. It was a fun project that allowed me to practice my skills and provided me with a couple hundred dollars a few times a year. As with my part-time job, every penny went straight into the savings account where it would sit for that fateful day (collecting interest).
It’s a bit (a lot) nerdy, but I love counting and rolling coins. There’s something very satisfying about counting up a pile of dimes ($0.10 coins for you non-North Americans) and seeing how much money you have. Because of this nerdy love, I’ve always had a piggy bank or jar that I’ve stashed my coins in. Normally, I kept it small, but because I was bound and determined to save I started putting everything into the piggy bank: $5 bills, pennies, nothing was too big or too small. Dave started doing the same and every few weeks, when the pig was ready to burst, we’d take the money to the TD coin counter. As we dumped our coins in, we’d place bets on how much we had and almost every time the total would exceed our wildest dreams. After that moment of joy, we’d deposit it into our accounts and forget about it until we were in Spain and in desperate need of tapas.
As our move date approached, we did an inventory of the apartment and looked at what furniture we would keep, what we would donate, and what we could sell. Items including our bedroom furniture, a few lamps, an air conditioning unit (that we never used), and various kitchen appliances were listed on Craigslist and Kijiji, and we managed to find good homes for them all. Not only did this net us a few hundred dollars, but we were able to get rid of things that we didn’t want, use or need. It also saved us future expenses because we didn’t have to figure out how to haul them elsewhere.
When I was younger I liked to shop. I was a bit of a clotheshorse and our closet reflected this. My side was crammed full of pieces I wore frequently; pieces I wore occasionally; and, pieces I’d bought, had never worn and would never wear. It was a bit of a disaster and I knew I’d have to cut down before we packed it all up—my shoes alone wouldn’t fit in one suitcase. So, I took the opportunity to start downsizing to my most beloved and most versatile items. Some things were thrown out, most were donated, and a few I tried to consign. I’ve read that many people have great luck consigning clothes, I just am not one of those people. In the end, I only sold one item for a measly $9.24. It certainly wasn’t what I was dreaming/hoping for, but it was something. And, as I said above, every penny counts.
Some things were thrown out, most were donated, and a few I tried to consign. I’ve read that many people have great luck consigning clothes, but I just am not one of those people. In the end, I only sold one item for a measly $9.24. It certainly wasn’t what I was dreaming/hoping for, but it was something. And, as I said above, every penny counts.
Changed my Latte Factor
If you’ve read any finance articles in the past few years you’ve undoubtedly heard of the latte factor. It’s a lovely theory that looks at how much money an individual could save if they didn’t buy a latte each day (it’s staggering, something like $1,250). I was already pretty good about bringing coffee in the morning, but I was guilty of taking a couple of trips to each week with colleagues. I mainly went to socialize (and gossip) and I didn’t want to give that up, so I found another way.
My cell phone provider at the time offered a number of member benefits, one of which was getting a $15 Starbucks gift card for just $10 by using a special code. So, I took advantage of this deal—justifying that I was essentially getting a latte (or two teas) for free. Once the card would run out, I’d go back online and purchase another one.
To further my savings and rewards, I used the gift cards in conjunction with the Starbucks app (back before they changed the rewards system), so at least once a month I was treated to a free beverage or snack.
Although I didn’t completely give up the luxury of coffee out, I was able to significantly reduce my costs and up my savings.
Dave and I looked for all the little ways we could reduce our everyday expenses, including doing laundry during off-peak hours to save on hydro, or only using the car when we couldn’t walk or ride our bikes. These were minor changes, but they added up in a big way.
Ahh credit card rewards, they can be quite wonderful if you use them properly.
Although we belong to points programmes such as Aeroplan, Air Miles and others, there were two rewards programmes that we used to save us significant money leading up to our trip:
President’s Choice (PC) Points is a program offered by Loblaw’s, a grocery chain in Ontario. For every dollar we spent on our PC Plus card we would earn points to put towards grocery purchases. We loved this program because we had to buy groceries, so why not save a little bit of money on them!
Dave and I collect PC Points as often as possible (including at Costco, when they started accepting MasterCard) and redeemed them whenever we could. This meant that a few times a year, our weekly shop was free!
AMEX Travel Rewards
Back when Costco still accepted American Express we signed up for the Travel Card. It had no annual fee, had a pretty good rewards ratio AND it was accepted at Costco. We shopped there often, so at that time, we thought we’d be cruising around the world for free in no time.
And then, just a few weeks later, Costco abandoned AMEX and partnered with MasterCard.
Even though the card isn’t widely accepted in Canada (or anywhere outside the US, really), we hung on to it. We would use it to book travel or any other time it was accepted, accumulating points whenever we could. Over the years, we managed to slowly accumulate enough points that when we booked our flights to Portugal, we were able to decrease the cost of the flights by 50%.
Use the Right Account
For the longest time, I kept most of my money in my chequing account, growing its balance along with the balance of my STS account. A few months before we left I realised this was stupid; I was losing out on valuable pennies I could be earning in interest. So, I came up with a plan and did some math.
I figured out the maximum amount I needed in my chequing account to cover all of my expenses (and then some) without dipping below my limit (I was trying to save money, the last thing I wanted was to pay that pesky monthly account fee!). Every payday, anything over and above that set amount was transferred to my savings account. This small change made a huge difference in my STS balance, and it helped me accumulate more interest each month (who doesn’t love free money).
Change in Mindset
The biggest, and most important thing I did when I started saving for this adventure was change my mindset. I knew this gap year abroad was a once in a lifetime opportunity to experience a new country, travel throughout Europe and take an extended amount of time off work, and I knew I wanted to make the most out of it.
So, I focused.
I focused so much of my attention on the future. I started thinking of things in terms of days, weeks, months in Europe. For example, when friends were going to the Dominican for a week over New Years, I pushed passed my potential FOMO and really asked myself: Would I rather go on this one week trip to Dominican, or spend two or three weeks exploring Europe? When I put things in these terms it was easy to stay focused. And I started doing this with everything – clothes, shoes, you name it and I compared it to time spent in Europe. Sometimes, the shiny, pretty thing won out (hey, I’m only human and deserve treats every so often), but most of the time dreams of European adventures kept me going.
There are a million ways to save money and make your dreams a reality, I just chose to focus on the above because they worked best for me and I saw results.
I set modest and attainable goals for myself. And when I surpassed those goals, I set all new ones. In the end, it wasn’t hard to save money, just a few adjustments here and there.
Yes, I did have to make sacrifices, and I did have to give a few things up along the way. But, what I got in return was priceless, and given the chance, I would do it all again in a heartbeat.
Come back tomorrow for part 2: Making the Money Last.
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