I’ve been thinking about writing a post like this for a while and finally decided to go for it, as I think it’s really important to know how to manage your money, especially as a teenager/young adult. Michael and I were sitting on our balcony in Santorini last month, watching the sunset, and I just kept thinking that I’m so grateful we’ve been smart enough with our money, to be able to splurge on experiences like these. We have seen so many people around us blow their money on drinking and useless spending, ultimately leading them to live from pay check to pay check. While I know some people enjoy that lifestyle, it was never for us, we always thought it was important to be wise with our money.
I’ve been working since I was sixteen, and pretty much saved every penny from my first three years of work. Except for a few clothing items I bought at the store I worked at and a last-minute trip to Punta Cana with Michael, I saved all the money I made. I never made any big purchases, I was very careful with what I spent my money on and weighed each decision before swiping my card. I learned the value of money at a young age and it was only when I moved onto a significantly higher paying job that I allowed myself to splurge on a few items (like a car and a Kate Spade purse!)
It also helps that I’m not the type of person to go out and party every weekend. I understand how fast money can be gone. In the few times that I’ve gone out, I must have spent about $40 each time for a couple drinks… that adds up quickly!
For me, saving money for my future was always important. I wanted to make sure that I had enough if ever something happened and that I would have enough for a down payment on a house when I graduate school. This end goal definitely helped me remain on track, money-saving wise.
Here are some of my tips:
- First decide what you want to save money for. Is it a long term goal- a house, for example, that would require you save for a long period of time? Or is it a short-term goal- a Europe trip for example, that would require you to save lots in a short amount of time? This will help you decide how much you should be putting into your savings every pay check (more on that below).
- Make a list of your necessary monthly expenses. This will allow you to see exactly what needs to be spent and what will remain from your pay checks. It will give you a realistic idea of how much you can hope to save in one year, for example. Try to be as honest with yourself as possible. If buying clothes is a necessary expense for you, then write it down. Although I would recommend you write down things that you wouldn’t be able to live without; food, gas, etc.
- Make a list of things you could cut out of your budget- make concessions. I really do think that to save money, you do need to tighten your belt a little bit and cut out some unnecessary spending. I love shopping as much as the next blogger, but I know this can quickly eat away at my savings. As a general rule, other than a few items of clothing here and there, I tend to limit my shopping sprees to twice a year. I always take a small trip with my mom and brother to the US at the end of summer, so this is when I get some clothes for back to school. The other time is either after Christmas so I can take advantage of after Christmas sales, or in the spring, so that I can get some summer clothes. If you spend $50 a month on manicures and you can live with doing it at home for a couple of years, scrap it. It doesn’t seem like much, but that’s $600 a year! You can do lots with $600!
- Save, save, save and save some more! Financial professionals will give you various percentages that you should spend and save from your pay check, but I believe that this varies from person to person. When I first started working, my percentage was practically 100% save. As I moved onto the higher-paying job, I found myself spending more because I could justify it with the higher pay, and this was when I had to remind myself that I should be saving more. At one point, I was automatically putting 50% in my savings, and keeping the other 50% in my checking account. This however did not mean that I was automatically spending the other 50%, it was just there if I needed it. If you really want to be strict about saving, I would recommend a 75-25 saving-spending percentage. The saving percentage can be higher if you want it to, it’s not necessary to spend!
- Have two accounts: a savings and a checking. This is especially great if you can have your savings account not linked to your debit card. This way, you won’t be able to access your savings when you’re shopping, restricting what you can spend even further. Also, having to do a few extra steps (transferring x amount from one account to the other, waiting for it to get processed, etc) might deter you from actually doing it.
- Find a balance. Even though I can be strict with my money, I do think it’s important to find a balance. I don’t spend much on clothes or electronics, but I don’t necessarily budget when it comes to a trip. I love travelling and I don’t want to sacrifice certain things on a trip because it might be the only time I get to go there! I really do think you can take advantage of your young years without destroying your future.
- Make a mood board with your goals (financial or otherwise). This one doesn’t only pertain to saving money, but if you have a picture of your goals right in front of you, it will be much easier to stick to your plan!
Thank you so much for reading, I really hope you enjoyed these tips! Do you have a tip that I didn’t mention? I’d love to hear it!