As a recent college graduate, earning a salary, I had to learn on the fly on how to effectively save money. Fortunately, I was able to listen to the vague advice from my Dad who instructed me to “save my money”. Those who need a little more direction than that can read this article for some useful advice on how to successfully save money in the real world.
As a young professional, what to do with your money will be the biggest dilemma you will face. Some of the challenges can include school loan debt, increase in bills from your new found independence, and increase in spending due to increase in income. With all these challenges, how can any year old be expected to have a decent savings account? Well, here are the tips I used to effectively save money after graduation
1) Create and execute a savings goal: Giving saving the old “college try” will not work. To save successfully, you must strive for a goal. The goal can range from ____ to ______ depending on your income you can determine your saving goal by doing a basic calculation of your income against your expenses and save most of what’s left over. Your personal goal may be $3000 or 30 bucks. The point is to set a goal and strive for it. Also setting a goal helps you get into the savings mindset. If you are used to spending everything you earn, a change of mindset will be necessary as a matter of urgency. Setting a goal will create the mindset required. A website that helps with creating a budget is https://www.budgetpulse.com//.
2) Cut unnecessary spending: This tip sounds easy but is actually the hardest to accomplish. “Unnecessary” is a term that we tend to twist for our benefit. This term needs to be placed in proper perspective for savings goal to be reached. Unnecessary spending is anything you can do without. Before buying your third pair of shoes for the month, ask yourself, “Do I really need this?” This can be challenging for most of us who will have the financial freedom to buy much more. This is an easy example but what about your cable bill? If you watch most of your shows online or on Netflix, why pay for cable? This could free up an extra $30-50 a month from your expenses. Another example would be skipping the daily coffee you buy every morning and instead pulling back to three times a week.
3) Tell the people close to you: There is nothing worse than being invited out by your friends to a nice restaurant when you know the place is too expensive for you. However, if you let your close friends and family know that you are currently in saving mode, they are likely to be more mindful of the number of times they will ask you to go out for dinner or for drinks. Alerting your loved ones and friends takes the pressure off of you to maintain a spending lifestyle that may not be suitable to your savings goal. With help from peers your goals will be easier to maintain and keep you focused.
These tips have helped me navigate the after college bumpy roads. The important thing to remember is to start early by creating a plan, do the little things and finally get help from your peers.
This article originally appeared on Under30FinanceSuscribe to the podcast