My wife and I started seriously planning for our financial lives together when I was around 27.
It really has to do with having a very pessimistic outlook as to your earning potential - she is doing law school now and I have a graduate degree - so we are both pretty high skill workers that could probably expect to be in top 5% income earners in our early 40s. Right now though, we still have school debt, and as I have said before, my wife is approaching a big increase in her student debt load.
So we have just been honest since the beginning. We don't own a car, and we will never buy a house until we can honestly afford it as a consumption good, not as some sort of bizarre savings vehicle or "investment." We never eat out. We used to save everything to an RRSP, when that hit the liquidity threshold of $25,000, we switched to an ETF, and the TFSA.
We don't have a lot of money saved - certainly nothing close to 100K, but we are well on the way to having a solid financial foot before we will have a family or even before we are both working.
To anyone else in a similar situation, I would recommend:
- dialing seriously back on luxury purchases. As everyone knows, for awhile, I liked to talk up my wardrobe. I definitely spent around $4k per year on clothing. That is obscene. Thankfully, I still have that wardrobe, and I take good care of it so that I really only need to spend a few hundred a year on underwear, socks, and recreational clothing.
- being satisfied with apartment living. I cannot tell you how many friends I have now in their late 20s and early 30s who own expensive townhouses or single detached homes who will be locked into mortgages worth more than the house. We have a plan for long-term housing like we plan for everything else. This includes contingencies.
- Substitute location for commuting. Been renting the same Beltline apartment for 3 years.
- Don't own a car if you don't absolutely need one or absolutely love cars.. Situate yourself close to cheap transportation.
- Learn to cook at home. Simple. We go out once a month for ramen, which I have now learned to make perfectly at home.
- Learn a bit about finance. Don't pay an investment adviser 2.7% to make decisions that you should make yourself.
- Take advantage of this era's dirt-cheap entertainment. Read a book. Have friends over for dinner. Find one thing you like in town and do it once or twice a month.
All of this seems like common sense, but I would say even this simple life plan is followed by barely 10% people that I know.
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