My first salary felt like it slipped through my fingers. The first expenses of living alone in an unfurnished apartment sucked out all the money I had earn. Even if I had some money left to save, I could not track it because I didn’t have a budget and had not defined the finacial milestones I wanted to achieve.

I quickly realised that earning money is the first and most important step, but it won’t help you build wealth if you end up spending all the money.

Once I realised my grave mistake, I set up a system to help me set money aside and start building wealth. I only had to set the system up once and have been using it ever since.

a) I tracked my spending for at least 1 month

Tracking expenses does not have to be complicated. I just downloaded my bank statement for the month and checked what I spent my money on. Below, I’ve shared a link to download the personal financial statements template which you can download for free and use to track your expenses over multiple years. The trick is to actually do it. Don’t just download the app and have it lost in the ocean of apps never to be used again. Make an effort to track your spending for a month so you have information that you can act upon.

b) Find the fat and trim it

While tracking my expenses, I took note of my needs and what my wants were. I could see that most of the execess in my spending was from of my wants and not my needs.

My needs were to pay my rent, pay for transportation and buy groceries for the month.

My wants ranged from excessive shopping for clothes, eating out, and borrowing money to family & friends. 

I reduced the money I spent on my wants drastically, but I did not completely cut it down to zero. This is because I believe in enjoying what I worked hard for while I’m still young enough to enjoy it.

c) Set savings & investment goals

Like I said before, I want to enjoy what I work hard for while I’m still young enough to enjoy it. This meant that I had to set clear savings and investment goals. I knew that by the end of 3 years working at as an auditor, I wanted to have a certain amount of money saved so that I could buy my own house and stop renting. For me, that became my simple savings goal which could lead to my first big investment.

The lesson I learned is to make the goal you want to achieve clear and place an amount to the goal. This will help you track how far you are from reaching that goal.

When I started building my wealth, the only tool I used was a savings account. This simplified my wealth building process and provided focus for what I aimed to achieve.

If I had to start building my wealth all over again, I would save and start investing. It’s easy to start investing even if you only have $50 to invest. There are platforms that have made investing in shares easy by offering investors the option to  purchase fractional shares. I would deploy this dual approach so that I reap the benefits of learning to investing but also safe gaurding that I stay on track in achieving the financial milestones I have. Which leads me to the next step which made building wealth.

d) Automate my savings

Even back then, it was easy to automate my savings. I chose a savings account that would take a certain amount of money from my cheque account when I got paid and automatically place it in a savings account. If I wanted to withdraw money from that savings account, I had to give a 30 days’ notice to the bank. This saving account earned more interest compared to the account that did not have a notice period.

The notice period helped me out of a lot of impulse purchases and when someone wants to borrow money from me. I would start explaining the process of giving a notice to the bank and having to wait for 30days. Hearing that just places brakes on anyone trying to borrow.

With these steps implemented, my savings grew. At the end of 3 years, I had decided to move from my home country and relocate to The Netherlands. I did not end up buying that house. I ended up using the funds to settle into a new country.