From flatmate to freedom: how I saved $12,000 in 8 months

When I started my savings journey last year, I had a few collectibles, a bag of clothes and my dog. And seeing as my dog didn’t have a job, I knew it was up to me to reach my financial goal of saving $12,000 in under a year.

I’m sure you’re wondering, ‘but Canstar, how did Katie save so much money so quickly?’

First of all, as someone who was never ‘financially savvy’, I had to teach myself how to manage my money in a way that helped me reach my savings goals but that didn’t leave me feeling deprived or overwhelmed in the process.

Wondering how I did it? These eight steps helped me go from renting a room in a houseshare to being in my own apartment within a year. And my dog didn’t have to do a thing.

1. Calculated financial goals and end dates

My first step was to assess my financial situation;what did I want in the near future, and how much would I need to save to achieve it? I grabbed an excel spreadsheet, a calculator and pocket-protector, then got nerdy.

I wanted to live on my own and be financially self-sufficient, so I set that as my primary goal, set myself a (realistic!) deadline to achieve it, and worked backwards.

To generate extra income, I decided to get a housemate. I gave myself a year of renting a room before I wanted to move into my own place with everything I would need. I had no appliances, and I knew I didn’t want to borrow money to get kitted out, so I would need to incorporate specific savings in order to cover all the bases.

So with my numbers crunched, I got started.

2. Moved to a cheaper house (houseshare)

I had to cut costs as much as possible, so I moved to a cheaper location and rented a room. I compared my setup with other houseshare options available and found it was quite a straight-forward agreement. Renting a room with utilities included was a great way to fast-track my savings goal.

Now, I know a houseshare isn’t a viable option for everyone, but for me it was the best way forward. And though it meant sacrificing a liberty or two, I wouldn’t have saved $12,000 in eight months any other way.

3. Minimised all non-essential expenses

I minimised my expenses enough to automatically save one in every two week’s income.

I knew that every dollar had to be accounted for, because even a coffee or two a week would subtract from my goals. I scrolled through my bank account and stared blankly into the face of all my subscriptions and small, regular payments. That was one long, regret-filled afternoon questioning my hyper-fixation on hot chippies and coffee.

In good news, my spreadsheet was coming to life, like a grown-up Pinocchio figuring out how to ‘adult’.

Fun fact: I calculated that buying just one coffee each week would cost me about $40 per month.

I took it further by calculating exactly how much I would save by cancelling my subscriptions, denying my chip addiction and drinking coffee from home ($20 + $120 + $40 per month = $2,160 for the year). It helped me see the dollars I would keep in my account and how, by scaling back on these little nice-to-haves, I would be able to afford the one thing I knew would make me happiest: having my own place.

I’ve got to say that cancelling Amazon and its streaming friends was a sad day, but saving money for me meant delaying gratification. I had to sacrifice some enjoyment for the long-term goal of financial independence.

4. Paid off any debts to avoid interest

I was fortunate enough to have started my savings journey with little debt, but I did have a Zip Pay account that was accruing account fees every month.

I knew that if I had debt, it should be the first thing to go, otherwise I’d be burning through $119 of Zip Pay account fees over the next year.

5. Sold everything I didn’t need

Once I knew that my end-goal was $12,000, I went about injecting extra money into my savings any way I could.

One way of doing that was assessing what I needed to live, then selling everything else. Second-hand traders like Facebook Marketplace were incredibly useful and I quickly discovered that my trash would be treasured by someone. Heroes DVDs, anyone?

6. Invested in ‘life staples’

The trick then was not to buy things to replace what I’d sold. I had to practice being content with what I had, so I watched as my possessions remained culled but my savings balance grew.

A few months later, I had the urge to shop. So I created another spreadsheet (yes, I replaced my chip addiction with a spreadsheet addiction—the ultimate adult power move?), and picked out the appliances I would need when it came time to move out. I wanted to funnel my urge for impulse buys into wise investments.

I spent time researching energy-efficient appliances, pasting links into my spreadsheet with the cheapest options I could find. I then waited for sales like Black Friday or end of financial year deals, only spending money on small items I could store in my current space (no third-party storage in this budget story).

7. Found a high-interest bank account

I had a Dollarmites account as a kid and was loyal to that program long after I lost my little yellow chequebook and coin tin. And when I started to save four figures, I realised I could be earning better interest on the money I’d saved—and a lot more than the measly 0.1% my old Dollarmites account had paid me.

So, better late than never, I researched high-interest bank accounts and settled on one that suited my needs. In particular, I appreciated no ATM fees and the 4.8% p.a. variable interest rate my new bank offered.

As my savings grew, so did my compound interest and I felt encouraged on my quest whenever I saw that bonus money drop into my account.

8. Celebrated successes

Ejecting the fun from my life short term to fast-track my savings was important, but I knew that I needed to be kind to myself along the way. It was important to celebrate milestones and victories because it gave me something to look forward to.

Now that I’ve ticked off those financial goals and am writing this from my own place (with not a housemate in sight—except the dog), I can look back and remember the time I celebrated reaching $5,000 by buying an entire Wicked cocktail set.

In summary: it’s good to have goals. And it pays to track your outgoings.

My short-term savings journey showed that if I could reach those goals on my own and in less than a year, maybe I could set bigger financial goals in the future. My long-term plans are to save for a house deposit and maybe even invest in health insurance.