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Save Something…Anything

| July 5, 2012 | 16 Comments

Young professionals (and entrepreneurs) need to save a consistent amount of every paycheck. If you can afford to save $500 a month, then you need to. If you can only afford to save $20 a month, then you need to do that too. It may seem insignificant, but over a 30-40 year career it makes a world of difference. Here is someone way smarter than me, explaining the wonders of compound interest and the importance of starting NOW.

Huge amounts of space on the interwebs have been dedicated to teaching how to save money. A Google search of “how to save money” yields 1.37 billion results, yes 1.37 billion! After reading each of these articles (kidding, I only read the first billion) they all have valid points and opinions. You could spend days reading different “experts” explain lifestyle changes that could lead to huge savings. There is value associated with that, but I believe it also part of the problem. They present you a list of 50 or 100 things to help save money. This leads to sensory overload and people tune out.

I wanted to take a different approach. I think it is more important to take one step toward saving money, don’t be overwhelmed by the sacrifices you need to make. Choose one thing you can do, and go from there. The key here is that it only takes a little bit. If you are under 30, you have time on your side. I have created a simple checklist to get the ball rolling and your nest egg growing.

5 Simple Steps to Start Saving (#alliteration)

  1. Decide how much you can afford to set aside each paycheck. Again, this could be $20 or $2,000. Prepare to make a tough decision. A few places to find some money: cell phone plan, cable bill, monthly subscriptions, eating/drinking habits, etc.

I use the rule of thumb that every bag lunch I bring to the office saves about $5. Bagged lunch means leftovers or a sandwich, not lobster or caviar. It seems small, but we are talking about lifetime habits.

  1. Create a new checking or savings account specifically for this money. You can use your existing bank or open an online account with slightly higher interest rates. I like the idea of using a completely different bank for this account. It has the effect of separating this money from more frequently used accounts. I personally feel less tempted to touch the money this way.
  1. Deposit the amount from Step 1 into the account every paycheck. This may sound silly, but taking the effort out of your hands will make a world of difference. It will take a little bit of effort up front, but will save you time and (hopefully) money down the road.

Note: If you can’t set this up through your employer’s direct deposit, then you need to link your main account (the one you deposit paychecks into) to the new one (Step 2) with your Account and Routing numbers. It may take a few days for the accounts to synch. After this, you can set up a scheduled transfer from the main account to the new account each payday.

  1. Leave the new account alone. Let the months and years pass, try not to check it every paycheck. Just allow it to accumulate. There is nothing sexy about it, that’s the whole point. You are building something. Do think aliens built the pyramids in a day?
  1. Check the account every couple of years. The interest made on this will not make you rich, but disciplining yourself to save will. After multiple years have passed you will have accumulated significant money. At this time you can start to think about investing it in the market or other retirement savings.

If you have some tools you use to help “find” extra savings, please share in the comments. Every little bit helps and I would love to hear ideas you guys have come up with to save some money.

Scott Moorhouse – I am a recent International MBA grad and recovering finance professional. My goal at Under30CEO is to make personal finance more accessible to those without finance or accounting degrees. Follow me at: @Moorhouse_Scott or be my friend at: LinkedIn

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Category: Startup Advice

  • http://chanon.info/ Chanon Srithongsook

    Just found your web when I’m almost 30. Digging back to all of your fantastic articles.

    Wishing you re-brand to over30ceo or startAt30ceo or something… hahaha.
    Anyway, whatever you named, I will still be a big fan!!

  • http://chanon.info/ Chanon Srithongsook

    Just found your web when I’m almost 30. Digging back to all of your fantastic articles.

    Wishing you re-brand to over30ceo or startAt30ceo or something… hahaha.
    Anyway, whatever you named, I will still be a big fan!!

  • Scott Moorhouse

    Glad you enjoyed the article.

  • Scott Moorhouse

    Glad you enjoyed the article.

  • Guest

    Scott, wonderful article and well said. It is indeed a lifestyle change for most people used to spending all of their paycheck and mostly even above that. Being and Asian/Indian myself, the hoarding/saving mentality in me and my lifestyle/habits make it impossible for me not to save every single paycheck. It’s a much healthier philosophy instead of living on cereal bars and repaying your loan in 9 months.

  • http://Under30CEO.com Jared O’Toole

     Awesome Chanon! While we probably won’t be re-branding anytime soon we always say “it’s all in the mindset”. We hope you continue to enjoy well into your 30s!

  • http://getbrode.com/ Marc Brodeur

    I have a funny mindset where I think of saving like a part-time self-employed job. So making my own dinner is worth $7. Taking the subway home is worth $20. Cheap entertainment is worth $35, etc. Over time, this “job” can earn quite a lot! Just do the multiplication.

  • http://getbrode.com/ Marc Brodeur

     And I’ll add to never EVER pay a bank fee for ANYTHING. I’ve been with Schwab for 5 years now, and I get free checking, savings, retirement, no international fees, no ATM fees, 24-hr support, free online banking, everything. I’m sure it’s added up to over $1000.

  • Scott Moorhouse

    Marc,
    Great point on the banking fees, I use Chase and they get me on those when I use a different ATM (anytime I am out of Chicago). I love how you mentioned the “game” of saving money. Where every action has some value associated with it. There could be a startup idea somewhere in that concept.

  • http://getbrode.com/ Marc Brodeur

    Oh, man, you use Chase? Dump them! You know they hate you, right? But seriously, there’s some great banking options out there now. Check em out.

  • http://getbrode.com/ Marc Brodeur

    Oh, man, you use Chase? Dump them! You know they hate you, right? But seriously, there’s some great banking options out there now. Check em out.

  • http://getbrode.com/ Marc Brodeur

    Oh, man, you use Chase? Dump them! You know they hate you, right? But seriously, there’s some great banking options out there now. Check em out.

  • http://getbrode.com/ Marc Brodeur

    Oh, man, you use Chase? Dump them! You know they hate you, right? But seriously, there’s some great banking options out there now. Check em out.

  • Venki

    Great idea, initially seems to be small thing but over the time will be fruitful. good example, person who invested $5000 in Walmart IPO in 1980′s and he did not watch 10 years later, when he see’s in 1990′s ,the amount he invested has become almost 5 million dollars, I feel good strategy for 5 to 10 years gives great result.

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