How to save money when you barely get paid
The second you exit college and enter the Real World, you start to hear terms like 401k and Roth IRA without ever knowing what they really mean.
Save 30 percent of your paycheck, they say. Pay off your loans, they say.
…And you’re like, have you seen my rent bill?
New Adults entering the workforce are stumbling even the greatest financial gurus, because We have issues they’ve never seen before. Majority of us are leaving college with tens of thousands of dollars in loans, and leaving the workforce soon after to find our “passion” (i.e. traveling to Thailand).
We aren’t planning on saving money to buy houses and get married by the age of 23 like generations before us. But, we do want that extra cushion just in case Donald Trump becomes president and those traveling plans sound like a better option.
So, how can you save money if you barely have any to start?
1. Make a realistic plan
It’s all good and well to be idealistic when it comes to saving, but we also know Sunday brunch is too hard to skip.
It’s okay that you haven’t saved $100k in the first 6 months of your job like all these articles tell you that you can. It’s okay to start small.
When you’re moving to a new city (i.e. brokers fees), starting a new job (i.e. need suits) or both —you realize that things in the Real World cost money. If you’re smart, but realistic about your savings plan, you will actually stick to it.
Take notes on what your weekly spending habits are (or if you’re not old-school, use an app like Mint). Then, think about where you can save versus where you actually need to spend money. Ask yourself questions like:
- Do you buy $5 lattes every day, or can you make your own coffee?
- Do you get UberEats for lunch, or can you go food shopping each week instead?
Of course, it’s your personal choice on where you splurge and save, but think through those habits first. And, don’t make promises you can’t keep.
2. Create a separate savings account
As soon as I started to see my paychecks deposited into my regular checking account, I realized it was dangerous to have all of that cash on hand.
So, I decided to open a completely separate savings account. Each time I get paid, I make sure to transfer as much as possible into that account. That way, my Real income isn’t visible to me. Out of sight, out of mind I like to say. But if I needed it (like when I forget my card at the bar) I could easily retrieve some extra moolah.
I use GE Capital (it’s strictly an online account with a little higher interest rate than normal), but opening an separate account anywhere is easy. You likely don’t even need to leave your couch. And, you can set up reoccuring withdrawals each month so you literally don’t need to use any brain power.
Seperating your idea of saving money and spending money helps to maintain your #budgetgoals.
3. Choose 1–2 “Treats” per month
I found that once I had a real paycheck, everything was a “Treat” to myself. Of course I could go shopping after work. And, of course I could join you for a Soul Cycle class. I had a hard week — I need to treat myself.
Those Treats soon became my reality. And I quickly realized that I would be in credit card debt if I continued those spending habits.
So, each month I decided to allow myself two Treats, so I could resist the opportunity to splurge all the time. Did I want to buy fancy coffee? Or substitute the subway for an Uber a few times?
Of course, you need to think of what’s doable within your budget still (3 trips to Australia are not considered Treats). Yet, this is a helpful way to reduce splurging.
You work hard — treats are allowed. But, be careful not to overdo it.
4. Be Honest & Be Creative
It’s easy to get caught up in a life — and budget — that isn’t yours. Being honest about your spending goals is not only refreshing, but it’s actually more liberating than you may think.
Of course, this is easier said than done.
But, being honest doesn’t mean you need to share your salary and rent and student loans with everyone at brunch. It means coming up with creative — and inexpensive solutions.
For example, if all of your friends want to go to a cool wine-making class in Brooklyn that costs almost as much as your apartment (and definitely out of your budget), tell them: “That’s cool. I’m going to skip this one guys, but let’s all meet at the High Line afterwards. Bring your wine and I got the sangria!”
Be cool. Be Honest. Be creative. You can still have fun (and friends) on a budget.
5. Realize it’s okay to spend, sometimes
Life shouldn’t be all about saving.
It’s okay to realize that you work really hard for a lot of reasons, but one of them being to enjoy your life. If there’s a coat you’ve been eyeing for weeks, or a trip you’ve been dying to take — go for it.
It’s okay to spend the money that you save, especially if you keep a realistic and up-to-date view on your finances.
Our 20s is the time to enjoy, be a little bit selfish, and live. Thankfully, our paychecks can provide us with the opportunity to do so. Take advantage of the savings, like packing your lunch during the week, and allow yourself some splurges on the weekend.
Being money-smart is one way to find your balance.