Earlier this year, my boyfriend and I both decided to start our own business.
We are both building websites from scratch. And we know that it will take us much time and love to get to the point where we can live from it.
We realized just how crucial it is for us to SAVE as much as possible, in order to be able to reach our goals. Luckily, we both know how it is to LIVE ON A BUDGET.
So much so that we almost see it as a game at times. Don’t get me wrong though, we would love to be able to go crazy with our money every now and then.
But we know that halving our expenses can mean 12 more months living on our savings. And that’s a major motivator for taking it playfully.
1. Set Yourself An Objective That Highly Motivates You
First, set yourself a clear OBJECTIVE that highly motivates you.
Our objective is TIME.
We both decided to build passive income with websites, which means that our business-related expenses are really low. We mostly need TIME AND SWEAT to get there.
How much time?
That’s the million-dollar question 🙂
It is really hard to guess when our businesses will really take off. But based on data I found around the topic, I would say 1,5 or 2 years is a reasonable time frame until we can make a really good living from it.
Now, if we both have about 10 000 € from savings and freelance work, spending €1500 / month will get us going for 6 months+ only. If we drastically reduce our expenses to about €750 / month, we have 13 months+ to live and work on our ventures.
That’s a HUGE difference!
It brings us a great deal of peace of mind to think that we have MORE THAN A YEAR to build something, full time. And that’s very important. We are both in our early 30s, and we both have suffered from stress-related health issues. We know that we cannot push it like we may have done in our 20s.
My body has stopped me before. So, knowing that I’ve got TIME to sleep, eat well, move, meet friends… while building my venture full time – is AWESOME! I want to be a “slowpreneur” and win the long-term game. Another “magic” effect of this logic is that, by lowering our living expenses, we also REDUCE THE TIME needed to be able to sustain ourselves from our businesses.
Instead of 2 years, we may only need 1 YEAR since we only roughly NEED €750 per month! So, what’s YOUR objective? Is it time as well? Or do you need initial capital to start your own venture? Whatever it is, do your calculations right and KNOW WHERE YOU ARE GOING.
2. List Your Past and Recurring Costs. ALL Of Them!
This step is of utmost importance. Don’t jump until you know where you are at. HOW MUCH MONEY DO YOU CURRENTLY SPEND EACH MONTH? Check ALL of your accounts to find out:
- Your bank account(s)
- Your credit card expenses summaries
- Any savings account you may have
- Your Paypal account
- …
I normally have a quite good grip on my expenses. But doing this proper check made me realize a few things. On the one hand, I saw that one of my biggest expenses was for books and online courses.
Although it is great to keep investing in yourself and to build knowledge, I found that my expenses for last year were MUCH HIGHER than what I actually ended up reading and watching.
So I decided to finish all the books and courses that I already have before buying new ones! The only expense I kept is my Audible Membership*. It only costs me €9,95/month and gives me the chance to get a new audiobook every now and then.
Going After Hidden Fees
On the other hand, by having a closer look at my credit card expenses, I discovered some HIDDEN FEES. For instance, I was often paying an additional fee of €1,5 when using my credit card on Amazon to buy items that were coming from outside the E.U. It’s not a major dealbreaker, but it’s definitely something to keep in mind…
To have a really CLEAR OVERVIEW of your expenses, I would advise you to check at least ONE FULL MONTH very precisely. Type your monthly expenses into Excel or an App, to have a clear overview at hand.
THEN, make sure to also skim through the past YEAR quickly, in order to filter out any YEARLY or QUARTERLY expenses that may not have shown up in the month you checked precisely.
Make sure to include the corresponding fraction of the expense in your monthly living costs.
For instance, if you pay, say €120 for insurance on a yearly basis, you should include €120 / 12 = €10 in your monthly expenses.
While you are at it, you should also make sure to check HOW MUCH MONEY YOU HAVE (NET WORTH)? How much of it is CASH or money that you can quickly access? How much of it have you decided NOT TO TOUCH and WHY?
Be sure to have a good overview and make sensible decisions. For instance, if you own a car and it is crucial for your work, make sure to always keep a little extra buffer of money in case something needs repair!
3. Use An App To Track For Every Cost When It Occurs
Now that you have looked at the PAST and realized how much MONEY you are ACTUALLY spending every month, you should keep up the good work and TRACK EVERY COST on a daily basis. I, personally use an app called Spendee.
There are a few budget apps out there, so no need to pick this one. Follow your guts and pick an app that you feel good using every day.
But, you may now wonder WHY YOU SHOULD GO THROUGH THE EXTRA PAIN OF TRACKING YOUR COSTS EVERY DAY? You have already done the work and know exactly what you are spending, right?
Well, when you get through the habit of typing in every cost WHEN IT OCCURS, you will start realizing how much you COULD SAVE BY CHANGING SMALL HABITS. I love to go out and spend time in cafés.
But if I do this every day, it will cost me at LEAST 3 x 30 = €90 / month. If I HAVE €90 extra budget this month, would I want to spend it like that? Maybe! But it’s important to make a CONSCIOUS DECISION ABOUT THIS. €90 could be:
- one tea or coffee in a cool place every day
- 6+ good restaurant meals with friends and family
- approximately two 45-minute massages
- about 9 yoga classes of about 1 hour
- 10 audiobooks…
You HAVE a choice.
Make the right one for you to be able to succeed in your business in the long run! If spending €90/month to go out and work from a cool café every day makes you happier and more productive, then this is a great choice!
What’s also great when using an app to TRACK YOUR EXPENSES DAILY is that saving will become a little bit more like a game. Every time, you will ask yourself whether you should spend the money.
And you will develop a strong motivation to BEAT YOUR OWN OBJECTIVES. So go ahead and start by downloading an app that suits you, and entering your recurring expenses 🙂
4. Carve Out The Unnecessary Expenses…
OK, now you should have a pretty good overview of your living costs. Do you have a detailed summary of your monthly expenses in an Excel sheet or an app? Great! Now, let us have a CLOSER LOOK at it together.
Please differentiate between LEISURE and NECESSITY. How much proportion do your leisure expenses take? Can you cut these costs by at least 50%? In my case, I decided to CUT the following expenses:
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Restaurant and cafés
I pay close attention to only RARELY go out and spend my money on restaurants or cafés. I only go when I have already saved quite a lot on my “food” budget or I’ve earned a little extra that I can spend on this. But, since I eat more and more Wildfit (you can read more about this in my article about this 90-day programme here), going out and finding appropriate food would be a challenge anyways… So, in a sense, it’s almost like my savings strategy contributes to a healthier lifestyle anyways.
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Chinese online classes
I was spending about €80-€90 per month to be able to practice Chinese with online teachers via the platform italki. Although I see this as a good investment in myself, I decided that this was more of a leisure activity at this stage. So I starting spreading out my Chinese lessons in order to reduce the cost to about €20 a month.
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Urban sports membership
Here in Berlin, I used to pay about €59 per month for the Urban Sports M (medium) membership, which gives you access to a lot of gyms, yoga studios, swimming pools etc. While the offer is awesome, I realized I simply was not using it enough. So I decided to quit this membership. I will reconsider it in the future if I start doing more sports again…
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Co-working space membership
Nearby our home in Berlin, there is a cool co-working space that only costs about €119 a month. That’s a pretty good deal in the area, and the fancy building is only 10 minutes by feet from our place. BUT I decided to decrease this expense down to €50 per month, with which I can only access the place for 4 days per month. It’s a bad deal when you compare it to the full-time membership, but I feel like going there just once per week (I can bring up to 2 people every time with me) is a good deal for me, and still saves me 69 €/month. If I would completely quit this membership, I would have to re-apply and hope for them to accept my application. A chance I am not willing to take at the moment.
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Unnecessary apps or the like
I decided to stop paying for 2-3 apps that I was merely using, saving about €15-20 per month. It’s not a big saving but I see it as setting the right signal. Just make sure to have NO UNNECESSARY COSTS.
But it is also important to treat yourself every now and then. Being too tough on yourself may lead to huge FRUSTRATIONS in the long run. So, which costs did I consciously NOT CUT?
- my Audible Membership*: it costs only €9,95 per month and I use it quite a lot. I love listening to audiobooks and those will be a great input for my personal development and this blog! That’s an expense I am keeping 🙂
- a small budget for my Chinese online classes: as mentioned above, I think that’s a great hobby and it may even prove useful in the long run. Spending €20 on this per month sounds adequate, and I will try to use the “missing lessons” as efficiently as I can, learning on my own.
- Netflix: I am not really proud of that one, but I feel like watching a series or movie every now and then helps me laugh and come down. I may rethink this in the future, as I would really like to decrease my screen time and do other things during my free time. But for the time being, that’s one expense where I decided to not be too tough on myself.
Note that some of the costs I have decided to decrease BUT NOT cut out completely can almost be considered like INVESTMENTS as well. I think it is a good strategy to keep investing in yourself, if just a little, every month.
5. Cook For Yourself At Home
If there is ONE thing that I have learned in my previous attempt to start my own business, it is NOT TO MAKE COMPROMISES ON MY HEALTH.
Because my body already STOPPED me in the past. You can read more about how my first venture attempt failed because I ended up in the hospital in my other blog post here. And what does this mean?
Well, in my case, this means I have to eat as healthy as possible. With time, I realised that not only would this help me NOT GET SICK but also give me SO MUCH ENERGY.
A true blessing when you are trying to build up your business!
Healthy food, YES! But ON A BUDGET!
Depending on the city and country you live in, you may have better options for going out and eating proper, healthy meals.
But in my area in Berlin, really healthy food (i.e. lots of vegetables and NO ADDED SUGAR) is hard to find and gets quite expensive. My current food budget of less than €8/day would at most help me get JUST ONE OK meal at the restaurant per day. So I learned to cook quick, easy and healthy meals for myself at home.
My boyfriend and I also made the conscious choice to buy mostly fresh and unprocessed food (lots of veggies!) BUT from cheaper supermarkets. We are literally able to eat healthily and enough for our €8/day (and per person) food budget. It is not all perfect yet though.
As a matter of fact, I would love to be able to go to higher-end purely organic stores, but at the moment I feel like it’s just not in it for us. Maybe I am just kidding myself, but with time, I found out that I am not able to face every battle at the same time. I am reflecting a lot on my consumer behaviour though, and hope to get better and better, and more environmentally-friendly with time.
6. Your Home: From A Total Cost Fiasco To A Potential Revenue Stream?
The more I think about it, the crazier it seems to me. We SPEND SO MUCH MONEY on our rent or property mortgages! It’s INSANE! I realized this by doing the same “mistake” as everyone else.
Two years ago, I bought my “dream apartment” in Berlin. But guess what? It happened to be over my budget. So I made everything I could and gathered every last penny I had to pay for it and get a huge mortgage.
My salary wasn’t high back then, and as you may have figured out by reading this article, my revenue is still pretty low right now. I rented every spare room I could, starting off with taking the smallest, 11sqm room for myself.
That was the only way I could make it work without getting broke in the process. In the meantime, I have started using Airbnb to rent spare rooms or even the whole place when we are all away on vacation or on a business trip. In high season, AirBnB can even bring in some extra money.
That was a really nice surprise to me considering the costs related to running the furnished apartment and paying back the mortgage.
That’s HUGE!
From money-guzzler to potential revenue income…
Have you ever considered this? But, to be honest, it still puts me under quite some stress not to know whether the low season (starting now!) will put a financial burden on my shoulders.
With all this experience, I’ve realised that “bigger” is NOT ALWAYS BETTER. At this stage, being only the two of us, it would be more relaxing to have a smaller, simpler and less expensive space in which we can “simply live” without having to bother about optimising rental time.
Now, try being HONEST to yourself: what is your home like? Does it really bring you joy or is it so expensive that it occupies your mind A LOT? My boyfriend and I are considering other, cheaper options that may work better for us. Which brings me to my next point…
7. Think Out Of The Box: Can You Drastically Decrease Your Costs By Changing Your Lifestyle?
This summer, we started dreaming around about moving to other places. Here are a few options we are considering:
- Moving back to the countryside. We just now happen to come back from Þingeyri, Iceland. We got lucky and could participate in a “startup decelerator” in this lovely end-of-the-world village of 250 people in the Westfjords. It was a heartwarming experience. Our life was revolving around the social morning hour at the swimming pool (a local tradition: coffee and hot tub at 8:30 a.m.!) and the Blue Bank (the small Icelandic co-working space and incubator of the village). We realized that we felt more social interaction in this small village than we normally do in a big city like Berlin. It simply feels colder here. Everyone is so busy. And living in the countryside most of the time means that you can drastically decrease your living expenses, especially those related to your home.
- Moving to South-East Europe, in particular, Bulgaria or Romania. I know Romania from previous trips and love it there. And a friend of mine just moved to Sofia, Bulgaria for a bunch of reasons. There are still many things to do there to help further develop local economies. And it feels like one can contribute to a higher level, as local entrepreneurs will receive newcomers with open arms. And of course, the living costs are about 50% of those in Berlin, which is also an appealing perspective.
- Living in a camper van for a few months, or more if we like it. We still hope to be able to travel around. I’d like to be more eco-conscious, hence I love to consider alternatives to flights. And a camper van could be fairly cheap when it comes to the living expenses. We’ve been asking around and could try renting it out from friends or family for a fair price first.
I must say that all of these options sound very appealing to me. Especially the thought of moving to a smaller, more appropriate space for the two of us, at least for a while. I feel very attracted by the minimalistic concept and feel like it also comes along with financial benefits. In a strange way, it’s more expensive for me to live in my own apartment than to rent it out. If I rent it out, I can account for all of my expenses to a greater extent. So why not rent it out completely and take this worry off my head?
8. Differentiate Between “Luxury” Expense And Crucial Investment For Your Business
Of course, some expenses will just HAVE TO BE when you are starting your own business. But it is really important that you learn to differentiate between what I would call a “luxury” expense and a true investment. Here are a few of my decisions as an example:
- Tailwind: to develop this blog and attract traffic quicker, I’ve decided to follow many experts’ advice and use Pinterest. And Tailwind seems to be an indispensable tool in order to operate on the latter. I am paying about €15/month, and think the expense is worth it. But time will tell if I was right.
- Teachable: I had started to put an old online class of mine on Teachable, with the intention to self-host it (it is currently only published on Udemy). However, I narrowed my strategy for now and decided to first focus on driving organic traffic to my website. Hence, no need to pay this membership fee for now. That’s about €39 saved per month – yay! Pay attention to this kind of business expense. It’s a sneaky one. I call it the “oh-I-may-need-this-in-the-near-future” BS expense. If you don’t need it NOW, spare the money!
- A monitor: every now and then, my neck hurts a little and I start considering buying a monitor. This one seems like a sensible expense as health is non-negotiable! However, I have decided that I would try to MOVE MORE, make appropriate PAUSES, LIMIT my working time and stress to counter my neck pain. I want to try to get to the root cause first. And it’s worked well! I will probably consider investing in order to improve my posture while working in the future, but for now, I feel like this saving tip is a good lesson in disguise!
Generally, it’s important to WATCH FOR FREE TOOLS and RESOURCES BEFORE you spend money.
However, there is a fine line between doing appropriate research in order to spend your money wisely, and wasting incredible amounts of your precious time just because YOU WON’T SPEND A PENNY.
Find the right balance – your TIME IS MONEY, TOO! When every expert I follow tells me that Tailwind’s paid programme is the way to go, and I know it’s within my budget, I really want to spare me the PAIN of doing the EXTRA HOURS of research to come to the same conclusion.
Just a little bit more food for thought: INVESTING is a fascinating process to me, but it’s not just putting money into material assets. If you are starting your own business, INVESTING IN YOURSELF is definitely CRUCIAL!
- Are you making sure that you can invest all the TIME you want in your business? That’s one key aspect my boyfriend and I try to achieve when decreasing our living expenses and maximizing the impact of our savings.
- Do you keep learning, with online classes, books, seminars…?
- Are you investing in your health (good food, sports, meditation…)? Believe me, business is a marathon, not a sprint. You’d better make sure that you can keep the pace over the years. Don’t push it too far. Don’t overestimate yourself, as I did.
Investing in yourself will HELP YOU create additional REVENUE streams in the long run. So keep at it!
9. Celebrate The Little Extras And Hereby Set An Incentive For You To Earn (More) With Your Business
When calculating my strict budget, I felt almost like we should live like MONKS to be able to make it. I’m exaggerating of course, but it did feel like we were going to cut on a lot of fun, as well.
So, I decided to add a small additional RULE that will both emulate us in our business endeavour and lift some potential frustrations. EVERY LITTLE EXTRA WE EARN FOR NOW GOES INTO OUR “FUN” BUDGET. We can go out to the restaurant or anything else we want with our first business earnings.
At the moment, it’s just about €40 to €80 per month for me with my online classes and EyeEm photography. My boyfriend earns a few euros with his Crowfall website and stream. It’s very little, but enough for PURE PLEASURE a few times a month. Here are all the benefits that I found to this rule:
- It’s a great incentive to GROW YOUR EARNINGS. It sends the right incentive to your BRAIN: go out and earn more, so you can treat yourself more!
- It helps you FOCUS ON AND CELEBRATE the SMALL WINS. That’s super important to stay motivated and realize that you are making progress,
- It makes you APPRECIATE the little EXTRAS life has to offer. Being able to the restaurant or a nice café IS A PRIVILEDGE that many cannot afford.
When To Shift This Rule…
Of course, this rule will change when we start making “real money”. Then I would only take a reasonable portion of it for celebrating and keep the rest to cover our living expenses and keep investing in ourselves.
I hope you found my 9 savings tips useful. If you’re starting a business, too, let me know your thoughts and experiences. I’d be really happy to get feedback from a peer.
The last thing I want to emphasize before you leave is that… YOU SHOULD NEVER SAVE MONEY ON YOUR HEALTH! There is truly no shortcut here. If I were to eat just pasta every day, I would eventually collapse and this would be NO HELP for my business. Your BODY is an investment, too.
If you treat it well, it will give you NICE RETURNS AND BENEFITS in the long run. But if you keep BORROWING from it, it WILL ASK FOR PAYBACK and I guarantee you cannot control WHEN the payback time will be, and how it will manifest.
Your BODY is YOUR BUSINESS. Invest WISELY.
Books That I Love… To Help You Out:
