I’d like to think I’ve always been good with my money. I make my credit card payments on time, never late with rent, haven’t asked relatives for money, etc. It’s a situation I know many people my age aren’t in, and it’s because we aren’t taught money management growing up. You may know how to balance an equation, but can you keep a positive balance in your checking account? Money is the root of all in our capitalistic world, and it’s all about the tips and tricks we have to keep it in our accounts.
The past few years my professional friends and I have opened up about money. Not exactly “how much do you make”, but affordability of things, living expenses, and how to have a growing savings account when there are so many fun things to indulge on in your 20s. Nights out! Weekends away! That toothbrush Khloe Kardashian keeps posting about! It’s no wonder we’re all broke. But with a few savvy tricks, I’ve found a balance of fun things – birthday trip to Europe, brunch in the city, a $200 work bag – while still contributing to my savings and retirement accounts. It’s not easy and I have definitely dipped into savings for rent, but I’m in a better financial situation than I could have imagined at 24 and I think that’s worth sharing.
The Envelope Method
This was the first lesson in my college money management course and had the biggest impact on me. The concept is simple: Put a fixed amount of cash in an envelope and only spend that money for the week. No more, no less. And if you’re not a cash person (like me) I have graduated up to totaling up each of my credit card payments in my Notes app as I make them, then using the calculator app to see how much is left. The best way to learn how to push your money farther!
Find a savings app (like Digit)
I can give as many tips as I’d like, but the reality is that an app is what grew my savings. I have been using Digit for 4 years and it’s the best. You can set up goals that it automatically moves money into from your account. That $5 you don’t spend every month? Goes straight into buying that new car. You can also set up payments straight to your credit card debt or student loans. And I love that you can set as many goals as you’d like with a set timeline or savings amount and it does all the work for you!
If you’re considering trying (or just want to see if the app is for you) here’s $5 to you to start your account and begin saving: https://digit.co/r/-JlwJ?wn
Automatic savings transfer
The minute I got a full-time job I made an automatic saving transfer within my bank for 10% of it to go into savings every paycheck. Best decision I’ve ever made! And because that money spends zero time in checking, I forget I have it. Truly the easiest way to build up a savings account without any work on your part.
Split up monetary gifts
It can be tempting when you receive money from a family member or a bonus to spend it all in one place – whether it’s a treat to yourself or straight into savings/debt. Or maybe you split it down the middle and do a little of both. Well, let’s take it a step further and split it up a lot more. When I receive any sort of extra money I split into several categories to get the most out of it.
A treat – I choose a treat that I’ve been wanting for forever and buy it. Money isn’t any fun if you can’t enjoy it!
Emergency savings – I use a third of whatever is left over and put it straight into my emergency savings
Specific savings – With the two-thirds remaining, I split it between everything I’m saving up for. It makes it small amounts that go in, but every little bit counts. Examples of specific savings are retirement, new car, expensive accessory, vacation, etc.
Budget for yourself
Everyone has a different system of budgeting and until you find one that works for you, you’re still going to be spending too much. Whether it’s a spreadsheet or an app like Mint, try out a few different methods to see what actually keeps you accountable with your hard earned cash.
Find a credit card to trust
Oh, I’m sorry, you’re promoting credit cards to manage money? Yes, I am. Credit cards don’t have to be bad. If you make your payments on-time, they can be a resource for purchasing expensive items and getting rewards. I personally love my Chase Sapphire Preferred Card because I am able to use my points for so many things – including flights and hotels for my Europe trip! And as long as I’m smart about using my budget and not purchasing out of my means, my credit card works in my favor with perks.