Money is one of the hardest things to open up and talk about for most adults. It’s something many people shy away from because we’ve been taught that it’s impolite to discuss. Most of us know only our own salaries and possibly the income of our spouse, and maybe our parents or close friends if they’ve chosen to be open about it, but it’s not rare to be completely unaware of those around you and their relationships with money. In the US, at least, money and the way we spend it seems to be kept on the down-low. While it’s probably easier to discuss fiscal investments than, say, credit card debt at the dinner table, most people box money away with dreaded topics like politics and religion, and leave it at that. That’s fine, of course because I personally wouldn’t prefer to discuss my take-home pay on a first date or with a complete stranger, but since most people aren’t used to talking about money on the regular, it can be hard to dive deep into information about budgets and 401ks and the like.
When discussing things like this with my peers, most of them say something along the lines of “I wish we’d been taught more about taxes and retirement in school, rather than having to memorize the periodic table” and though I totally agree that I’d wished I’d learned more about saving for my future than the chemical makeup of chlorine gas, I think our society’s relationship with money is partially to blame.
Most young people haven’t been taught to navigate things like benefits, investments, money market accounts, when and when you can’t pull out of the stock market, insurance premiums, auditing, and wtf is inheritance tax? It’s enough to make anyone’s head spin.
But when it comes to saving money, there’s really not much to it. Here’s how I do it:
Make a Budget
Be it through a mobile app (I use Mint) or a traditional excel sheet, the key to creating a budget that works is to keep things realistic and reasonable for your life. Even if you want to, remember that nobody can change all their habits overnight, so when you’re first starting out make sure your new plan reflects the way you’d live unbudgeted, just with a few more guidelines. What works for me is keeping the “categories” relatively vague. I feel as though if I budgeted down to the last dime, I’d go way over my “Starbucks” fund in a panic. To keep it simple, I’ve separated my budget into 8 Categories:
- Auto & Transport (including Gas, general car expenses, and things like Uber and metro)
- Bills (including phone, internet, credit card payments, etc.)
- Entertainment (Netflix, Hulu, going to the movies, random activity expenses)
- Food (including groceries, going out, and the occasional Taco Bell run)
- Home (including rent and home necessities)
- Personal Care (haircuts, skin and beauty products, mani-pedis, etc.)
- Gifts & Donations
- Shopping (clothes, shoes, etc.)
Of course your categories may vary greatly from mine – the important thing is that you make a budget that works for you! If I go under budget in any of these categories throughout the month, I transfer those funds to savings or tuck them away for vacation.
Implement a Monthly “No Spend Week”
One of the biggest money savers for me has been choosing one week out of the month to reduce spending to all but the necessities. I use this as a time to use up what’s in my pantry, finish almost empty bottles of shampoo, and make do with what I have. I call this a “No Spend Week,” and it usually lasts Monday through Friday, but will occasionally stretch it into the weekend. Consider this like a little reset to your spending habits, rather than just putting yourself on an all out spending ban. Not only does this give you the chance to forget about the impulse purchases you have sitting in various online carts, it teaches you what is actually important to you and what you’d like to do with your money when it comes to longer-term goals. Taking a break from spending gives your bank account a minute to breathe, but doesn’t deprive you and end in binge-shopping like an all out ban could.
Set a Goal
I was terrible with New Years resolutions back in January, but around the mid-year mark I set a quantitative goal for how much I wanted to have in my savings account by the end of the year, and if everything goes according to plan I’ll likely accomplish that. When I’m fawning over a $400 Gucci belt, a $250 cast iron pan, or even $4 at a frozen yogurt shop, I think about my end-of-year goal and it snaps me right back out of it.
Find Resources, Give Yourself Incentives, and Make it Fun
I started watching a YouTube channel called The Financial Diet a few months back that inspired me to keep a better eye on my coin. I liked their simple but reasonable approach to finances, and I found myself learning new things with each one of their videos and blog posts. As for incentives, I’ve got my big financial goal, but I’m also planning a few smaller scale purchases that won’t hurt my goals. It’s important to reward yourself every once in a while, even if that spending might seem “counterproductive.” Be it a dinner out with each goal you reach, a new dress when you hit a milestone, or putting away a few dollars here and there for a new computer or vacation, find a REASON other than “I’ll need to save this for when I’m old.” Make sure you have funding for fun!
What are your tricks and tips to saving extra money?