To save at least $20,000 in first year of work, allocate $1,800 from your monthly salary to a savings account. Next, work out the strict proportion of money that you can spend for daily necessities. Although you will be able to save $21,600 with the initial allocation, you might want to save up the residuals too for subsequent investment purposes.

Why save up $20,000 in first working year?

Saving up $20,000 in your first working year gets you one step ahead to achieve financial freedom. The journey is a lot of math, learning and patience. Further, it accumulates good habit to manage a sizeable investment portfolio in your later working years. Finally, saving up $20,000 may allow you to retire earlier!

Are we able to save up $20,000 in first year of work?

Yes, we did. The InvestCouple managed to save up $20,000 with our own challenges. Taking an average pay of $3,500 per month, it would be $2,800 after contributing 20% to CPF. Next, following the “Save first then spend wisely” mantra, you will want to allocate strict proportion to your daily necessities. Here’s our strict daily life budget allocation: Dinner & entertainment budget: 15%, Parents budget (Includes overseas travel): 7%, Transportation expenses: 5%, Lunch budget: 5%, Telco expenses: 2%

5 simple steps to save $20,000 in your first year of career.

Step 1. Know how much you have after contributing 20% to CPF. Simply multiply 0.8 to your salary to get that or find out from your HR Department. For example, if you are getting $3,500 a month for your salary,

0.8 x $3,500 = $2,800 

Step 2. Using an excel sheet, start listing down your daily necessities and put the price tag beside it. Here is a free excel template to start with:

Step 3. When your first pay day comes, allocate $1,800 to a savings account. Maintain your discipline to not withdraw from that account. The best way is not to have a Internet Banking Token or ATM card for this savings account.

Step 4. Work out the budget for your daily necessities and allocate the proportion for them. Plan out any other yearly trips, wedding dinners invitations, etc. Prioritise the list and you’ll need to strike them off if it hinders your way to $20,000 a year.

Step 5. If you do the right math, saving $1,800 per month would give you $21,600 per year. This excludes bonuses, which means you would have saved more than $20,000 at start of next year.

Remember the key to saving $20,000 a year is to define how much you want to save first, then allocate how much you are able to spend! Most girls don’t love math, but I do really love Math. Easy math in this case.