I have a confession to make: I was never good with money. I understood the basic concept of income vs. spending, but I was never any good at saving. My real wake-up call, though, was when I got myself into trouble with my first credit card. It was summer after my senior year and I was finally old enough to get a credit card. The plan was simple: use it once or twice a month on small purchases to build good credit history. But like many young adults, I got in way over my head with spending my “free” money. Thankfully, I’ve since dug myself out of that hole and learned a whole lot more about finances along the way. For example, I now understand how a 401(k) works! But more on that when I start my post-grad career. For now, check out how I’m getting my financial life together!
I Made a Budget
My first step in getting my financial life together was making a budget. I sat down with my mom (seriously, I could not have done it without her) and looked at my spending categories. For example, for this school year, we created a section of the budget for rent/utilities, food, wifi, textbooks, household supplies and incidentals (i.e. movie night). Then we looked at my overall budget for the month (in this case, I included income from my part-time job and my financial aid). I estimated how much of that overall budget needed to go to each section, rounding up for utilities and textbooks. And I had a budget!
I Stopped Buying Things I Didn’t Need
While I try to avoid shopping when trying to save money, I still find myself wanting to make fun purchases. Like, I would really love to get in on Sephora’s new Weekly Wow sale, but do I really need a 50% off makeup palette? The answer is no (unfortunately). When I take a moment to step back and question whether the item is a need or a want, I actually think about where my hard-earned money is going. More often than not, I decide against the purchase and either save it for a fun experience like movie night or transfer what I would have spent to my savings account. This isn’t to say I haven’t bought any beauty products since implementing this strategy, but I’m much more deliberate when buying.
I Got Myself Out of Debt
This is pretty self-explanatory. Every dollar earned outside of my budgeted income went straight to paying off my credit card. My budget really came in handy here, as it helped me to avoid spending extra income just because I had it – if my fun money budget was already maxed out, I couldn’t increase it just because of more income.
I Read Broke Millenial
I promise this is not an ad for this book – I just really like it. The book covers everything from different types of budgets to how to manage your student loans. Not going to lie, a lot of the things mentioned in this post came about because I read this book. The author, Erin Lowry, also has a BLOG that has tons of helpful tips on it.
I Started Saving My Change
A lot of banks offer “Keep the Change” programs. Basically, your bank will round up purchases to the nearest dollar and automatically deposit it in a savings account. That’s great and all, but the savings account I used to have at my bank had a 0.01% annual percentage yield. That meant my savings were just sitting in the account and earning no interest.
So instead of relying on that program, I downloaded Acorns, an app that rounds up purchases just like your bank would. But instead of the spare change just sitting in the account, it invests your money into a basic investment portfolio. It’s perfect for young adults who struggle to save (me) and while investing is obviously more risky than a high yield savings account – more on that below – the amounts invested are pretty small. For example, in the past month I’ve saved $60 just from rounded up purchases. And I don’t miss it at all! I also set up a recurring investment of $5, so I’m always saving a little bit of money without even having to think about.
Be aware, though, that this isn’t a good idea if you’re wary of the stock market or risk. Over the past month, I’ve lost about $0.16 as the market fluctuated, but I think of my Acorns account as a long-term investment that will ride out fluctuations.
I Opened a High-Yield Savings Account
Remember when I mentioned my old savings account that didn’t earn any interest? I shut that down real quick once I learned about high-yield savings account (again, from Broke Millenial – shocker, I know). These are essentially online-only savings accounts that are able to offer a higher yield rate for your savings. Because they’re online-only and don’t have to pay for upkeep of brick-and-mortar stores, they can offer that higher rate and you earn more on your savings because of it. The best options have no minimum balance and no maintenance fees.
I started earning rebates
Not gonna lie, I’ve started to feel like a crazy couponing lady with all the apps I currently have on my phone for coupons & rebates. In addition to my local drugstore apps, I have Ibotta, Ebates & Checkout 51. Each app is a little different, but essentially, you either activate a rebate before buying or scan your receipt after purchase to get cash back on qualifying items. Sometimes it’s 1% cash back on any item at a certain store, sometimes it’s $0.75 cash back on Nutella & Go cups (I’ve definitely not used that one a couple times). I know that those numbers don’t sound huge, but if you plan ahead and shop carefully, you can earn a decent amount back. Last month, I earned about $25 through Ibotta – which I then withdrew and deposited into my high-yield savings account!
The most important thing to remember with this strategy, though, is to not buy things you don’t need just because you have a coupon or rebate. I avoid this by making a grocery list and sticking to it no matter what. Even if something I want but don’t need has a rebate offer, I don’t buy it. (The only time I ever switch up my list is if a different brand of the same product has an offer that will actually save me money over my original brand choice).
I’ve only been getting my financial life together for a few months yet have already made huge amounts of progress. I think these strategies just work: they’re easy to implement, a lot of them require little thought and many can be done right from your phone.