How I saved 32% of My Income

How I Saved 32% Of My Income



Don’t Listen To Me, But Please, Hear Me Out: # 17

Shaheeda Abdul Kader, Aug 19 2020

There are two things my father said to me all the time; two things I am most grateful for.

“Reach for the stars, so that you may at least reach the roof.”

“If you earn $10, you must only spend $2.”

I took both to heart. One was a lot easier than the other. Any guesses which one?

Ha, ha, of course saving money. It’s so easy to spend. We are constantly bombarded with beautiful images and products on Instagram, Pinterest, Billboards, etc., how do you not covet what you see. Remember Hannibal Lecter in Silence Of the Lambs, the all-time classic movie? 

Silence Of The Lambs. Check out minute 0.40 onwards.

“Precisely. We begin by coveting what we see every day.”

Hannibal Lecter, Silence of the Lambs

Advertisers know this best and we are all victims to their allure.

Well, I greatly coveted a BMW M3 Coupe.

Reaching For the Stars

I reached for the stars and got an MBA from Duke University and a plum job as a management consultant. Needless to say, I was so ecstatic. Banks and real estate agents and luxury car dealers flooded me with offers of amazing credit cards, shiny loud toys and spacious homes I could get lost in. Apparently, I was potentially a great customer: MBA from a top 10 University and a high paying job with a Big 4 Consulting firm and I was all of 26 years old.

For those who like startup lingo, my LTV or Lifetime Value as a Customer could potentially be very big to all these companies.

I got credit cards in the mail without even applying for them. 

I got pre-approved mortgage offers for 5 times my salary with just a 5% down-payment.

And then, I got the sweetest deal of all. Or so I thought. 0% interest, 0 down payment for a BMW M3 Sports Coupe. You see, I idolize my father. He is a self-made, hardworking, exceedingly handsome man and he always drove a BMW. When I was little, he used to let me pretend I was driving the car and the 3-year-old me really believed I was. So getting a great job and driving a BMW meant that I would be realizing my dream to be like my dad: successful and sophisticated.

My sister and I in front of our dad’s BMW going to school. Happy days.

Getting Your Dad’s Blessing

I called my father that night so excited to share the news that I had decided to buy my first BMW M3 with a sticker price of $35,000. (I totally forgot about taxes, registration costs and any other additional features I may want.) 

Me: Uppa, I’m so excited, I got a really good offer on a BMW. It’s only $35,000.

Dad: What are you talking? (He was so angry.) Don’t stretch your legs before you have even sat down.

Me: But Uppa, I can afford it. This is my salary. (Please note, I had not even started my job yet.)

Dad: #$@@!!! 

Ok, so dad chewed me out for 10 minutes explaining to me the value of money and how it is 1000 times harder to earn than to spend and how you can never predict the future. (Hello 2020.)

I felt so deflated and disappointed. But it is my culture that you always make major decisions with your parents’ blessings. 

Lucky for me, it was a blessing in disguise. I was able to save $100,000 within 4 years of employment because I took my father’s advice. I am going to show you how.

Steps to Financial Freedom Once You Have an Income

Step 1: Find the cheapest, safest, most comfortable home to live in.

I’ll talk about renting vs buying a house in another blog. My short answer is rent when you are starting out. Buy only if you know you can pay it off within 5 years for sure. Debts and loans are heavy burdens to carry. If unfortunately you report to an unpleasant boss, the liabilities you have may compel you to stay in the job. Large loans rob you of your freedom and peace of mind. When you are in your 20’s and early 30’s you should truly exploit the freedom to explore different career options and take risks. Mortgages may not be conducive to that, you will feel tied down.

If this pandemic has taught us anything, it is that you can never have enough cash. It can be debilitatingly stressful to have a huge mortgage if you suddenly lose your source of income. Honestly, my stock market returns are much higher with exceedingly low maintenance cost than the property I own.

So, find a nice place to call home. If you can live comfortably in a 1 bedroom, don’t rent a 2 bedroom home. I always rented a 1 bedroom flat, in a safe neighborhood that was no more than 20 minutes to work and the airport. My rent was between between $700 – $1200 per month depending on the city I lived in. It was easy to keep a super clean flat and well maintained. This in turn ensured my landlords liked me and often they did not raise my rent and I always got my full refund back. 

Step 2: Buy a Used Car

After my father’s advice, I bought a 4-yr old Mazda Miata with about 30,000 miles on it, for $8,400. Dad told me to buy a cheaper car. So technically, he didn’t say I could not buy a convertible. To build my credit history, I paid down $2,000 and paid interest on the balance for about 3 years. 

Oh, and it was a 5-speed stick shift and I have a lot of funny stories about how I learned to drive it after I bought the car.

This is the same model and color as my car. I had so much fun in this car.

The charts below show you how these two decisions alone helped me save a lot of money.

My Total Savings Buying a Mazda Miata Vs. BMW M3

You can see that after the first year of employment, had I bought the BMW instead of the Mazda, I would have actually been in the hole or I would have had a negative balance in my account. You can see I saved 8% with the Mazda option and would have had a negative savings of -4% in the BMW option.

I worked very hard and was super lucky that I got promotions, bonuses and salary increments every year.

So, by year 5, you can see that with my used car option, I was able to save 32% of a higher income. Whereas with the BMW option, I would have only saved 19% even with the higher income.

Step 3: Curb Your Enthusiasm For Retail Therapy

I wish I had spent a lot less on clothes, shoes and other fashion accessories. However, you will also notice that all my other expenses like food, clothing etc., have also decreased as a percentage of total expenses. This is because even though I was earning more, I did not drastically change my lifestyle. I continued to stay in similar sized flats, did not go out and entertain more than I normally would, did not buy more clothes and shoes etc. With the BMW option, by the 5th year I would have been able to increase savings rate from -4% to 19% provided I maintained my lifestyle from year 1. 

My Savings & Expenses Over a 5 Year Period.

What’s the Actual Difference Between 19% and 32%?

Let’s say my income was $100,000. Let’s assume I invested my savings in the S&P 500 Index Fund. The Chart below shows you how much my savings would have grown to with the modest living versus the luxury living

With modest living and my used car, I would have $32,000 in savings to start with and $19,000 had I chosen the luxury BMW. You can see that the growth widens as the years go by.

Growth in Savings Invested in the S&P 500

Note: 5 year returns assumes that I invested $32,000 in August 2015 and the 10 year return assumes that I invested $32,000 in Aug 2010.

Take Aways

So, does this mean we should all live an austere life? Not at all. I chose to live in a great zip code that was safe and secure for a single gal.

The best advice I can give are:

  • Don’t spend just because you think you can.
  • Don’t spend even if you have all the cash in the world unless it’s going to give you real joy.

Speaking of joy, here are things that I remember and still bring me joy.

What I Do RememberWhat I Don’t Remember
Giving my first paycheck to my mom.All the Prada, Manolo Blahnik, Valentino, Di Sandro, Salvatore Ferragamo shoes I bought (Ok so I do remember some of them)
Meals I enjoyed with my family & friend. The moments I spent with my family & friendsAll the Clothes I bought. I look at old photos, and all they do is remind me how skinny my waist was. 
Bungee Jumping, Sky Diving, Parasailing, Hiking, SailingAll the handbags and jewelry I bought
Traveling & Road TripsMakeup (I didn’t buy much of it)
Shows & concerts I attendedGrocery Shopping (I have blocked this out of mind. I hate Grocery Shopping.)
My Bank Balance
My Mazda Miata
What Brings You Joy?

If I could change one thing about my spending habits in my 20’s and 30’s, I wish I had bought far less clothes and shoes. I could have then come a bit closer to my dad’s requirement of spending $2 for every $10 I earned. If I didn’t have to pay taxes and I spent a lot less on clothes, I would have saved $5 out of every $10 I earned or 50%.

Oh by the way, I have the fondest memories of zipping around in my Miata, racing corvettes at traffic lights. What can I say, the boy was checking me out instead of the light. Oh, and once a gentleman in the car ahead of me bought me a rose from a street vendor. I bet you didn’t think saving money and modest living can lead to intriguing, mysterious encounters. 

PS: Four and a half years later I sold my Miata for $4,200.

If you would like help on how to budget to save more, please feel free to reach me, on Twitter @saq3 or LinkedIn @Shaheeda Abdul Kader, or leave a message at I’d be happy to offer you my services. Please do check my other blogs here.


I am NOT a certified broker or financial advisor. Please DO NOT make investment decisions based solely on my blogs. My intention is o show you how to research stocks or funds for yourself so you can feel empowered and knowledgeable to do your own investigations and invest with confidence. It is best to consult with your broker or advisor if you have questions. You can also reach me and I’ll do my best to help you with your queries.

Shaheeda Abdul Kader

After 25 years of working for corporations, being an entrepreneur and managing investments for my family, I now want to help others find their financial freedom